The proven Zacks Rank system focuses on earnings estimates and estimate revisions to find winning stocks. Nevertheless, we know that our readers all have their own perspectives, so we are always looking at the latest trends in value, growth, and momentum to find strong picks.
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 tried-and-true metrics and fundamental analysis to find companies that they believe are undervalued at their current share price levels.
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 ADT (ADT). ADT is currently sporting a Zacks Rank of #2 (Buy) and an A for Value. The stock is trading with a P/E ratio of 9.22, which compares to its industry's average of 14.51. ADT's Forward P/E has been as high as 10.52 and as low as 8.31, with a median of 9.32, all within the past year.
Investors should also recognize that ADT has a P/B ratio of 1.82. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. This company's current P/B looks solid when compared to its industry's average P/B of 4.53. Over the past 12 months, ADT's P/B has been as high as 1.93 and as low as 1.55, with a median of 1.76.
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 prefered metric because revenue can't really be manipulated, so sales are often a truer performance indicator. ADT has a P/S ratio of 1.37. This compares to its industry's average P/S of 1.98.
Finally, investors should note that ADT has a P/CF ratio of 4.05. This metric takes into account a company's operating cash flow and can be used to find stocks that are undervalued based on their solid cash outlook. This company's current P/CF looks solid when compared to its industry's average P/CF of 11.77. Within the past 12 months, ADT's P/CF has been as high as 4.29 and as low as 2.56, with a median of 3.29.
These are only a few of the key metrics included in ADT'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, ADT looks like an impressive value stock at the moment.
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ADT Inc. (ADT): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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