While the proven Zacks Rank places an emphasis on earnings estimates and estimate revisions to find strong stocks, we also know that investors tend to develop their own individual strategies. With this in mind, we are always looking at value, growth, and momentum trends to discover great companies.
Of these, value investing is easily one of the most popular ways to find great stocks in any market environment. Value investors use a variety of methods, including tried-and-true valuation metrics, to find these stocks.
In addition to the Zacks Rank, investors looking for stocks with specific traits can utilize our Style Scores system. Of course, value investors will be most interested in the system's "Value" category. Stocks with "A" grades for Value and high Zacks Ranks are among the best value stocks available at any given moment.
One company value investors might notice is Target (TGT). TGT is currently sporting a Zacks Rank #2 (Buy), as well as an A grade for Value.
TGT is also sporting a PEG ratio of 2.41. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. TGT's industry has an average PEG of 3.93 right now. Over the last 12 months, TGT's PEG has been as high as 2.96 and as low as 1.45, with a median of 2.01.
Value investors also love the P/S ratio, which is calculated by simply dividing a stock's price with the company's sales. This is a popular metric because sales are harder to manipulate on an income statement, so they are often considered a better performance indicator. TGT has a P/S ratio of 0.5. This compares to its industry's average P/S of 1.46.
These figures are just a handful of the metrics value investors tend to look at, but they help show that Target is likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, TGT feels like a great value stock at the moment.
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Target Corporation (TGT): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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