Here at Zacks, our focus is on the proven Zacks Rank system, which emphasizes earnings estimates and estimate revisions to find great stocks. Nevertheless, we are always paying attention to the latest value, growth, and momentum trends to underscore 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 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.
EmbraerEmpresa Brasileira de Aeronautica (ERJ) is a stock many investors are watching right now. ERJ is currently sporting a Zacks Rank of #1 (Strong Buy), as well as an A grade for Value. The stock is trading with P/E ratio of 17.16 right now. For comparison, its industry sports an average P/E of 24.10. Over the last 12 months, ERJ's Forward P/E has been as high as 24.12 and as low as 13.64, with a median of 17.72.
We also note that ERJ holds a PEG ratio of 0.98. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. ERJ's industry currently sports an average PEG of 1.94. Over the past 52 weeks, ERJ's PEG has been as high as 1.08 and as low as 0.89, with a median of 0.95.
We should also highlight that ERJ has a P/B ratio of 2.45. 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 solid versus its industry's average P/B of 5.20. Over the past 12 months, ERJ's P/B has been as high as 3.10 and as low as 1.47, with a median of 1.97.
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 prefered metric because revenue can't really be manipulated, so sales are often a truer performance indicator. ERJ has a P/S ratio of 1.29. This compares to its industry's average P/S of 1.91.
Finally, we should also recognize that ERJ has a P/CF ratio of 13.74. This data point considers a firm's operating cash flow and is frequently used to find companies that are undervalued when considering their solid cash outlook. ERJ's P/CF compares to its industry's average P/CF of 30.44. ERJ's P/CF has been as high as 17.38 and as low as 7.62, with a median of 9.91, all within the past year.
These are just a handful of the figures considered in EmbraerEmpresa Brasileira de Aeronautica'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 ERJ is an impressive value stock right now.
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Embraer-Empresa Brasileira de Aeronautica (ERJ): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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