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.
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 Teradata (TDC). TDC is currently sporting a Zacks Rank of #2 (Buy), as well as an A grade for Value. The stock has a Forward P/E ratio of 8.94. This compares to its industry's average Forward P/E of 14.98. Over the past year, TDC's Forward P/E has been as high as 15.73 and as low as 8.41, with a median of 13.16.
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. TDC has a P/S ratio of 1.14. This compares to its industry's average P/S of 1.41.
Finally, our model also underscores that TDC has a P/CF ratio of 9.19. This figure highlights a company's operating cash flow and can be used to find firms that are undervalued when considering their impressive cash outlook. TDC's current P/CF looks attractive when compared to its industry's average P/CF of 13.69. Over the past year, TDC's P/CF has been as high as 24.20 and as low as 8.74, with a median of 15.91.
These are just a handful of the figures considered in Teradata's great Value grade. Still, they help show that the stock is likely being undervalued at the moment. Add this to the strength of its earnings outlook, and we can clearly see that TDC is an impressive value stock right now.
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Teradata Corporation (TDC): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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