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 rely on traditional forms of analysis on key valuation metrics to find stocks that they believe are undervalued, leaving room for profits.
In addition to the Zacks Rank, investors looking for stocks with specific traits can utilize our Style Scores system. Of course, value investors will be most interested in the system's "Value" category. Stocks with "A" grades for Value and high Zacks Ranks are among the best value stocks available at any given moment.
One company value investors might notice is Edison International (EIX). EIX is currently sporting a Zacks Rank of #2 (Buy), as well as an A grade for Value. The stock is trading with a P/E ratio of 9.77, which compares to its industry's average of 14.27. Over the last 12 months, EIX's Forward P/E has been as high as 16.23 and as low as 8.63, with a median of 14.22.
EIX is also sporting a PEG ratio of 1.16. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. EIX's industry has an average PEG of 1.81 right now. Over the last 12 months, EIX's PEG has been as high as 1.91 and as low as 1.02, with a median of 1.61.
Another valuation metric that we should highlight is EIX's P/B ratio of 1.40. 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. EIX's current P/B looks attractive when compared to its industry's average P/B of 2.27. EIX's P/B has been as high as 2.09 and as low as 1.20, with a median of 1.81, 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. Some people prefer this metric because sales are harder to manipulate on an income statement. This means it could be a truer performance indicator. EIX has a P/S ratio of 1.3. This compares to its industry's average P/S of 2.35.
Finally, our model also underscores that EIX has a P/CF ratio of 4.78. 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. This stock's P/CF looks attractive against its industry's average P/CF of 10.57. Over the past 52 weeks, EIX's P/CF has been as high as 8.21 and as low as 4.10, with a median of 6.99.
These figures are just a handful of the metrics value investors tend to look at, but they help show that Edison International is likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, EIX feels like a great value stock at the moment.
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Edison International (EIX): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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