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.
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.
One company to watch right now is TORM (TRMD). TRMD is currently sporting a Zacks Rank #2 (Buy), as well as an A grade for Value. The stock is trading with P/E ratio of 5.05 right now. For comparison, its industry sports an average P/E of 6.36. TRMD's Forward P/E has been as high as 6.73 and as low as 3.06, with a median of 5.36, all within the past year.
We should also highlight that TRMD has a P/B ratio of 0.76. 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 stock's P/B looks solid versus its industry's average P/B of 1.31. Over the past year, TRMD's P/B has been as high as 1.86 and as low as 0.61, with a median of 0.91.
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 preferred metric because revenue can't really be manipulated, so sales are often a truer performance indicator. TRMD has a P/S ratio of 1.17. This compares to its industry's average P/S of 1.35.
Finally, investors should note that TRMD has a P/CF ratio of 2.61. This metric takes into account a company's operating cash flow and can be used to find stocks that are undervalued based on their solid cash outlook. TRMD's P/CF compares to its industry's average P/CF of 4.58. Within the past 12 months, TRMD's P/CF has been as high as 4.43 and as low as 1.94, with a median of 2.59.
Value investors will likely look at more than just these metrics, but the above data helps show that TORM is likely undervalued currently. And when considering the strength of its earnings outlook, TRMD sticks out as one of the market's strongest value stocks.
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TORM PLC (TRMD): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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