Should Value Investors Buy Barclays (BCS) Stock?

BCS

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.

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 use fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.

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 Barclays (BCS - Free Report) . BCS is currently holding a Zacks Rank of #2 (Buy) and a Value grade of A. The stock holds a P/E ratio of 4.40, while its industry has an average P/E of 7.12. Over the last 12 months, BCS's Forward P/E has been as high as 8.20 and as low as 4.14, with a median of 5.72.

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 prefered metric because revenue can't really be manipulated, so sales are often a truer performance indicator. BCS has a P/S ratio of 0.9. This compares to its industry's average P/S of 1.21.

Value investors will likely look at more than just these metrics, but the above data helps show that Barclays is likely undervalued currently. And when considering the strength of its earnings outlook, BCS sticks out at as one of the market's strongest value stocks.

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