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, value investing is easily one of the most popular ways to find great stocks in any market environment. Value investors use fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.
Zacks has developed the innovative Style Scores system to highlight stocks with specific traits. For example, value investors will be interested in stocks with great grades in the "Value" category. When paired with a high Zacks Rank, "A" grades in the Value category are among the strongest value stocks on the market today.
One stock to keep an eye on is Kelly Services (KELYA - Free Report) . KELYA is currently sporting a Zacks Rank of #2 (Buy), as well as a Value grade of A.
Investors should also note that KELYA holds a PEG ratio of 1.66. 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. KELYA's industry has an average PEG of 2.08 right now. Within the past year, KELYA's PEG has been as high as 1.71 and as low as 1.35, with a median of 1.46.
Another valuation metric that we should highlight is KELYA's P/B ratio of 0.64. 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 attractive against its industry's average P/B of 1.74. Over the past year, KELYA's P/B has been as high as 0.88 and as low as 0.32, with a median of 0.60.
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. KELYA has a P/S ratio of 0.15. This compares to its industry's average P/S of 0.39.
These are just a handful of the figures considered in Kelly Services'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 KELYA is an impressive value stock right now.