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.
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.
WEX (WEX) is a stock many investors are watching right now. WEX is currently sporting a Zacks Rank of #2 (Buy) and an A for Value. The stock has a Forward P/E ratio of 8.44. This compares to its industry's average Forward P/E of 22.36. Over the last 12 months, WEX's Forward P/E has been as high as 12.93 and as low as 7.27, with a median of 10.50.
Investors should also recognize that WEX has a P/B ratio of 3.40. The P/B ratio is used to compare a stock's market value with 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 8.27. Within the past 52 weeks, WEX's P/B has been as high as 5.15 and as low as 2.96, with a median of 4.26.
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 popular metric because sales are harder to manipulate on an income statement, so they are often considered a better performance indicator. WEX has a P/S ratio of 1.72. This compares to its industry's average P/S of 2.31.
Finally, investors should note that WEX has a P/CF ratio of 8.27. 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. WEX's P/CF compares to its industry's average P/CF of 17.50. Over the past 52 weeks, WEX's P/CF has been as high as 16.79 and as low as 7.19, with a median of 12.01.
These figures are just a handful of the metrics value investors tend to look at, but they help show that WEX is likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, WEX feels like a great value stock at the moment.
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WEX Inc. (WEX): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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