While the proven Zacks Rank places an emphasis on earnings estimates and estimate revisions to find strong stocks, we also know that investors tend to develop their own individual strategies. With this in mind, we are always looking at value, growth, and momentum trends to discover great companies.
Considering these trends, value investing is clearly one of the most preferred ways to find strong stocks in any type of market. Value investors use a variety of methods, including tried-and-true valuation metrics, to find these stocks.
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 Rent-A-Center . RCII 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 9.77, while its industry has an average P/E of 11.63. Over the past year, RCII's Forward P/E has been as high as 13.19 and as low as 4.44, with a median of 10.35.
Value investors also use the P/S ratio. The P/S ratio is is calculated as price divided by sales. This is a prefered metric because revenue can't really be manipulated, so sales are often a truer performance indicator. RCII has a P/S ratio of 0.67. This compares to its industry's average P/S of 1.13.
Finally, we should also recognize that RCII has a P/CF ratio of 2.15. 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. This company's current P/CF looks solid when compared to its industry's average P/CF of 8.56. RCII's P/CF has been as high as 2.17 and as low as 0.79, with a median of 1.83, all within the past year.
These figures are just a handful of the metrics value investors tend to look at, but they help show that Rent-A-Center is likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, RCII feels like a great value stock at the moment.
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Are Investors Undervaluing Rent-A-Center (RCII) Right Now?
While the proven Zacks Rank places an emphasis on earnings estimates and estimate revisions to find strong stocks, we also know that investors tend to develop their own individual strategies. With this in mind, we are always looking at value, growth, and momentum trends to discover great companies.
Considering these trends, value investing is clearly one of the most preferred ways to find strong stocks in any type of market. Value investors use a variety of methods, including tried-and-true valuation metrics, to find these stocks.
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 Rent-A-Center . RCII 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 9.77, while its industry has an average P/E of 11.63. Over the past year, RCII's Forward P/E has been as high as 13.19 and as low as 4.44, with a median of 10.35.
Value investors also use the P/S ratio. The P/S ratio is is calculated as price divided by sales. This is a prefered metric because revenue can't really be manipulated, so sales are often a truer performance indicator. RCII has a P/S ratio of 0.67. This compares to its industry's average P/S of 1.13.
Finally, we should also recognize that RCII has a P/CF ratio of 2.15. 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. This company's current P/CF looks solid when compared to its industry's average P/CF of 8.56. RCII's P/CF has been as high as 2.17 and as low as 0.79, with a median of 1.83, all within the past year.
These figures are just a handful of the metrics value investors tend to look at, but they help show that Rent-A-Center is likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, RCII feels like a great value stock at the moment.