Here at Zacks, we focus on our proven ranking system, which places an emphasis on earnings estimates and estimate revisions, to find winning stocks. But we also understand that investors develop their own strategies, so we are constantly looking at the latest trends in value, growth, and momentum to find strong companies for our readers.
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.
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 stock to keep an eye on is Compania Cervecerias Unidas (CCU). CCU is currently sporting a Zacks Rank of #2 (Buy) and an A for Value.
CCU is also sporting a PEG ratio of 1.21. 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. CCU's industry currently sports an average PEG of 2.85. Within the past year, CCU's PEG has been as high as 3.22 and as low as 0.51, with a median of 1.46.
Value investors also use the P/S ratio. The P/S ratio is is calculated as price divided by sales. This is a popular metric because sales are harder to manipulate on an income statement, so they are often considered a better performance indicator. CCU has a P/S ratio of 0.8. This compares to its industry's average P/S of 1.07.
Finally, our model also underscores that CCU has a P/CF ratio of 14.54. 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. CCU's P/CF compares to its industry's average P/CF of 46.32. Over the past 52 weeks, CCU's P/CF has been as high as 20.73 and as low as 11.71, with a median of 15.13.
These are only a few of the key metrics included in Compania Cervecerias Unidas'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, CCU looks like an impressive value stock at the moment.
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Compania Cervecerias Unidas, S.A. (CCU): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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