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.
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.
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.
Leidos (LDOS) is a stock many investors are watching right now. LDOS is currently sporting a Zacks Rank of #2 (Buy), as well as a Value grade of A. The stock is trading with a P/E ratio of 14.30, which compares to its industry's average of 24.83. LDOS's Forward P/E has been as high as 20.34 and as low as 12.02, with a median of 16.21, all within the past year.
Investors should also note that LDOS holds a PEG ratio of 1.93. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. LDOS's industry has an average PEG of 1.94 right now. LDOS's PEG has been as high as 1.93 and as low as 0.85, with a median of 1.48, all within the past year.
Another notable valuation metric for LDOS is its P/B ratio of 4.45. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. This stock's P/B looks attractive against its industry's average P/B of 5.46. Over the past 12 months, LDOS's P/B has been as high as 5.76 and as low as 3.79, with a median of 4.50.
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 prefered metric because revenue can't really be manipulated, so sales are often a truer performance indicator. LDOS has a P/S ratio of 1.18. This compares to its industry's average P/S of 1.93.
Finally, investors should note that LDOS has a P/CF ratio of 13.43. This figure highlights a company's operating cash flow and can be used to find firms that are undervalued when considering their impressive cash outlook. LDOS's P/CF compares to its industry's average P/CF of 31.97. Within the past 12 months, LDOS's P/CF has been as high as 18.38 and as low as 11.01, with a median of 14.92.
These are only a few of the key metrics included in Leidos's strong Value grade, but they help show that the stock is likely undervalued right now. When factoring in the strength of its earnings outlook, LDOS looks like an impressive value stock at the moment.
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Leidos Holdings, Inc. (LDOS): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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