The proven Zacks Rank system focuses on earnings estimates and estimate revisions to find winning stocks. Nevertheless, we know that our readers all have their own perspectives, so we are always looking at the latest trends in value, growth, and momentum to find strong picks.
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.
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 Sensata Technologies Holding (ST). ST is currently sporting a Zacks Rank #2 (Buy) and an A for Value. The stock is trading with P/E ratio of 9.35 right now. For comparison, its industry sports an average P/E of 19.87. ST's Forward P/E has been as high as 10.57 and as low as 5.38, with a median of 8.90, all within the past year.
Investors should also note that ST holds a PEG ratio of 1.30. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. ST's industry currently sports an average PEG of 2.42. Over the last 12 months, ST's PEG has been as high as 1.37 and as low as 0.72, with a median of 1.11.
Another notable valuation metric for ST is its P/B ratio of 1.62. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. This stock's P/B looks attractive against its industry's average P/B of 3.99. Over the past 12 months, ST's P/B has been as high as 2.12 and as low as 0.91, with a median of 1.53.
Value investors also use the P/S ratio. The P/S ratio is calculated as price divided by 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. ST has a P/S ratio of 1.22. This compares to its industry's average P/S of 2.94.
Finally, our model also underscores that ST has a P/CF ratio of 8.09. 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. ST's P/CF compares to its industry's average P/CF of 19.82. ST's P/CF has been as high as 10.16 and as low as 4.54, with a median of 7.12, all within the past year.
Value investors will likely look at more than just these metrics, but the above data helps show that Sensata Technologies Holding is likely undervalued currently. And when considering the strength of its earnings outlook, ST sticks out as one of the market's strongest value stocks.
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Sensata Technologies Holding N.V. (ST): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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