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.
Considering these trends, value investing is clearly one of the most preferred ways to find strong stocks in any type of market. Value investors use fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.
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 Deluxe (DLX). DLX is currently holding a Zacks Rank of #2 (Buy) and a Value grade of A. The stock holds a P/E ratio of 4.38, while its industry has an average P/E of 8.18. Over the past 52 weeks, DLX's Forward P/E has been as high as 7.19 and as low as 4.13, with a median of 6.03.
Investors will also notice that DLX has a PEG ratio of 0.36. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. DLX's PEG compares to its industry's average PEG of 0.75. Over the last 12 months, DLX's PEG has been as high as 0.60 and as low as 0.34, with a median of 0.50.
Investors should also recognize that DLX has a P/B ratio of 1.09. 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. DLX's current P/B looks attractive when compared to its industry's average P/B of 1.56. Within the past 52 weeks, DLX's P/B has been as high as 1.75 and as low as 1.02, with a median of 1.50.
Value investors also use the P/S ratio. The P/S ratio is is calculated as price divided by sales. This is a prefered metric because revenue can't really be manipulated, so sales are often a truer performance indicator. DLX has a P/S ratio of 0.32. This compares to its industry's average P/S of 0.36.
Finally, we should also recognize that DLX has a P/CF ratio of 2.70. 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. DLX's P/CF compares to its industry's average P/CF of 6.60. Over the past year, DLX's P/CF has been as high as 4.20 and as low as 2.52, with a median of 3.48.
These figures are just a handful of the metrics value investors tend to look at, but they help show that Deluxe is likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, DLX feels like a great value stock at the moment.
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Deluxe Corporation (DLX): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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