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 stock to keep an eye on is Fiat Chrysler . FCAU is currently sporting a Zacks Rank of #2 (Buy), as well as a Value grade of A. The stock holds a P/E ratio of 7.33, while its industry has an average P/E of 13.41. FCAU's Forward P/E has been as high as 13,013.31 and as low as -2,085.57, with a median of 5.38, all within the past year.
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. FCAU has a P/S ratio of 0.24. This compares to its industry's average P/S of 0.36.
Finally, investors should note that FCAU has a P/CF ratio of 4.45. 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. FCAU's P/CF compares to its industry's average P/CF of 4.93. Within the past 12 months, FCAU's P/CF has been as high as 4.61 and as low as 0.74, with a median of 1.60.
These figures are just a handful of the metrics value investors tend to look at, but they help show that Fiat Chrysler is likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, FCAU feels like a great value stock at the moment.