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.
Looking at the history of these trends, perhaps none is more beloved than value investing. This strategy simply looks to identify companies that are being undervalued by the broader market. Value investors use a variety of methods, including tried-and-true valuation metrics, to find these stocks.
On top of the Zacks Rank, investors can also look at our innovative Style Scores system to find stocks with specific traits. For example, value investors will want to focus on the "Value" category. Stocks with high Zacks Ranks and "A" grades for Value will be some of the highest-quality value stocks on the market today.
One stock to keep an eye on is Strattec Security (STRT). STRT 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 16.18 right now. For comparison, its industry sports an average P/E of 18.15. Over the past 52 weeks, STRT's Forward P/E has been as high as 20.21 and as low as 8.54, with a median of 13.89.
Another valuation metric that we should highlight is STRT's P/B ratio of 1.19. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. This stock's P/B looks attractive against its industry's average P/B of 3.42. Over the past 12 months, STRT's P/B has been as high as 1.38 and as low as 0.58, with a median of 0.77.
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 preferred metric because revenue can't really be manipulated, so sales are often a truer performance indicator. STRT has a P/S ratio of 0.63. This compares to its industry's average P/S of 0.73.
These figures are just a handful of the metrics value investors tend to look at, but they help show that Strattec Security is likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, STRT feels like a great value stock at the moment.
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Strattec Security Corporation (STRT): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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