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, 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 use a variety of methods, including tried-and-true valuation metrics, to find these stocks.
Luckily, Zacks has developed its own Style Scores system in an effort to find stocks with specific traits. Value investors will be interested in the system's "Value" category. Stocks with both "A" grades in the Value category and high Zacks Ranks are among the strongest value stocks on the market right now.
One company to watch right now is NCS Multistage (NCSM). NCSM is currently sporting a Zacks Rank #1 (Strong Buy) and an A for Value. The stock is trading with a P/E ratio of 11.17, which compares to its industry's average of 21.10. Over the past year, NCSM's Forward P/E has been as high as 13.10 and as low as 7.39, with a median of 11.52.
Another notable valuation metric for NCSM is its P/B ratio of 1.01. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. NCSM's current P/B looks attractive when compared to its industry's average P/B of 2.41. NCSM's P/B has been as high as 1.05 and as low as 0.38, with a median of 0.62, over the past year.
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. NCSM has a P/S ratio of 0.76. This compares to its industry's average P/S of 1.15.
Finally, investors will want to recognize that NCSM has a P/CF ratio of 7.32. 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. This company's current P/CF looks solid when compared to its industry's average P/CF of 11.69. Over the past year, NCSM's P/CF has been as high as 8.09 and as low as 0.93, with a median of 5.52.
These are only a few of the key metrics included in NCS Multistage's strong Value grade, but they help show that the stock is likely undervalued right now. When factoring in the strength of its earnings outlook, NCSM looks like an impressive value stock at the moment.
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NCS Multistage Holdings, Inc. (NCSM): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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