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 rely on traditional forms of analysis on key valuation metrics to find stocks that they believe are undervalued, leaving room for profits.
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 stock to keep an eye on is Energy Transfer (ET). ET is currently sporting a Zacks Rank #2 (Buy), as well as a Value grade of A. The stock is trading with P/E ratio of 12.54 right now. For comparison, its industry sports an average P/E of 12.67. Over the last 12 months, ET's Forward P/E has been as high as 14.92 and as low as 9.59, with a median of 12.16.
ET is also sporting a PEG ratio of 0.59. 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. ET's industry has an average PEG of 0.81 right now. Over the last 12 months, ET's PEG has been as high as 0.64 and as low as 0.37, with a median of 0.54.
Another notable valuation metric for ET is its P/B ratio of 1.48. 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. ET's current P/B looks attractive when compared to its industry's average P/B of 2.05. Over the past 12 months, ET's P/B has been as high as 1.71 and as low as 1.25, with a median of 1.42.
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 popular metric because sales are harder to manipulate on an income statement, so they are often considered a better performance indicator. ET has a P/S ratio of 0.76. This compares to its industry's average P/S of 1.12.
Finally, investors should note that ET has a P/CF ratio of 6.37. This data point considers a firm's operating cash flow and is frequently used to find companies that are undervalued when considering their solid cash outlook. This company's current P/CF looks solid when compared to its industry's average P/CF of 8.54. Over the past year, ET's P/CF has been as high as 7.57 and as low as 5.47, with a median of 6.30.
These are just a handful of the figures considered in Energy Transfer's great Value grade. Still, they help show that the stock is likely being undervalued at the moment. Add this to the strength of its earnings outlook, and we can clearly see that ET is an impressive value stock right now.
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Energy Transfer LP (ET): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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