Here at Zacks, we focus on our proven ranking system, which places an emphasis on earnings estimates and estimate revisions, to find winning stocks. But we also understand that investors develop their own strategies, so we are constantly looking at the latest trends in value, growth, and momentum to find strong companies for our readers.
Of these, perhaps no stock market trend is more popular than value investing, which is a strategy that has proven to be successful in all sorts of market environments. Value investors rely on traditional forms of analysis on key valuation metrics to find stocks that they believe are undervalued, leaving room for profits.
Zacks has developed the innovative Style Scores system to highlight stocks with specific traits. For example, value investors will be interested in stocks with great grades in the "Value" category. When paired with a high Zacks Rank, "A" grades in the Value category are among the strongest value stocks on the market today.
One company value investors might notice is DHI Group (DHX). DHX is currently sporting a Zacks Rank #1 (Strong Buy), as well as a Value grade of A. The stock is trading with P/E ratio of 12.56 right now. For comparison, its industry sports an average P/E of 14.63. Over the past 52 weeks, DHX's Forward P/E has been as high as 28.42 and as low as 8.99, with a median of 14.14.
Value investors also frequently use the P/S ratio. This metric is found by dividing a stock's price with the company's revenue. This is a preferred metric because revenue can't really be manipulated, so sales are often a truer performance indicator. DHX has a P/S ratio of 0.87. This compares to its industry's average P/S of 1.08.
Value investors will likely look at more than just these metrics, but the above data helps show that DHI Group is likely undervalued currently. And when considering the strength of its earnings outlook, DHX sticks out as one of the market's strongest value stocks.
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DHI Group, Inc. (DHX): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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