While the proven Zacks Rank places an emphasis on earnings estimates and estimate revisions to find strong stocks, we also know that investors tend to develop their own individual strategies. With this in mind, we are always looking at value, growth, and momentum trends to discover great companies.
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 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 company value investors might notice is Eldorado Gold (EGO). EGO is currently sporting a Zacks Rank #2 (Buy), as well as an A grade for Value. The stock has a Forward P/E ratio of 10.15. This compares to its industry's average Forward P/E of 13.51. Over the last 12 months, EGO's Forward P/E has been as high as 16.24 and as low as 7.84, with a median of 10.52.
We also note that EGO holds a PEG ratio of 0.30. 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. EGO's industry currently sports an average PEG of 0.46. EGO's PEG has been as high as 1.33 and as low as 0.26, with a median of 0.31, all within the past year.
We should also highlight that EGO has a P/B ratio of 1.08. 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. EGO's current P/B looks attractive when compared to its industry's average P/B of 1.87. Over the past year, EGO's P/B has been as high as 1.11 and as low as 0.71, with a median of 0.90.
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. EGO has a P/S ratio of 2.94. This compares to its industry's average P/S of 3.38.
Finally, we should also recognize that EGO has a P/CF ratio of 7.38. 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. This company's current P/CF looks solid when compared to its industry's average P/CF of 10.66. Over the past year, EGO's P/CF has been as high as 8.30 and as low as 5.08, with a median of 6.27.
These figures are just a handful of the metrics value investors tend to look at, but they help show that Eldorado Gold is likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, EGO feels like a great value stock at the moment.
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Eldorado Gold Corporation (EGO): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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