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.
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.
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 Northwest Natural (NWN). NWN is currently sporting a Zacks Rank #2 (Buy), as well as an A grade for Value. The stock is trading with a P/E ratio of 13.4, which compares to its industry's average of 15.21. Over the past 52 weeks, NWN's Forward P/E has been as high as 17.00 and as low as 13.15, with a median of 14.30.
We should also highlight that NWN has a P/B ratio of 1.1. 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. This company's current P/B looks solid when compared to its industry's average P/B of 1.24. Over the past 12 months, NWN's P/B has been as high as 1.25 and as low as 1.00, with a median of 1.15.
Value investors also love the P/S ratio, which is calculated by simply dividing a stock's price with the company's 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. NWN has a P/S ratio of 1.32. This compares to its industry's average P/S of 1.56.
Finally, investors should note that NWN has a P/CF ratio of 5.86. 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. This company's current P/CF looks solid when compared to its industry's average P/CF of 8.68. Within the past 12 months, NWN's P/CF has been as high as 7.39 and as low as 5.84, with a median of 6.83.
These are only a few of the key metrics included in Northwest Natural'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, NWN looks like an impressive value stock at the moment.
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Northwest Natural Gas Company (NWN): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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