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.
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 fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.
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.
One company to watch right now is Heritage Insurance (HRTG). HRTG is currently sporting a Zacks Rank of #1 (Strong Buy), as well as a Value grade of A.
Value investors also use the P/S ratio. The P/S ratio is is calculated as price divided by 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. HRTG has a P/S ratio of 0.74. This compares to its industry's average P/S of 1.31.
Finally, our model also underscores that HRTG has a P/CF ratio of 8.36. This metric focuses on a firm's operating cash flow and is often used to find stocks that are undervalued based on the strength of their cash outlook. This company's current P/CF looks solid when compared to its industry's average P/CF of 10.31. Over the past 52 weeks, HRTG's P/CF has been as high as 8.58 and as low as 3.08, with a median of 4.93.
Value investors will likely look at more than just these metrics, but the above data helps show that Heritage Insurance is likely undervalued currently. And when considering the strength of its earnings outlook, HRTG sticks out at as one of the market's strongest value stocks.
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Heritage Insurance Holdings, Inc. (HRTG): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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