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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, 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 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 company value investors might notice is Alcoa (AA - Free Report) . AA is currently sporting a Zacks Rank of #2 (Buy), as well as a Value grade of A.
We should also highlight that AA has a P/B ratio of 1.07. 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 company's current P/B looks solid when compared to its industry's average P/B of 1.20. Over the past year, AA's P/B has been as high as 1.19 and as low as 0.18, with a median of 0.49.
Value investors also use the P/S ratio. The P/S ratio is 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. AA has a P/S ratio of 0.6. This compares to its industry's average P/S of 0.61.
Value investors will likely look at more than just these metrics, but the above data helps show that Alcoa is likely undervalued currently. And when considering the strength of its earnings outlook, AA sticks out at as one of the market's strongest value stocks.
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Should Value Investors Buy Alcoa (AA) Stock?
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, 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 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 company value investors might notice is Alcoa (AA - Free Report) . AA is currently sporting a Zacks Rank of #2 (Buy), as well as a Value grade of A.
We should also highlight that AA has a P/B ratio of 1.07. 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 company's current P/B looks solid when compared to its industry's average P/B of 1.20. Over the past year, AA's P/B has been as high as 1.19 and as low as 0.18, with a median of 0.49.
Value investors also use the P/S ratio. The P/S ratio is 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. AA has a P/S ratio of 0.6. This compares to its industry's average P/S of 0.61.
Value investors will likely look at more than just these metrics, but the above data helps show that Alcoa is likely undervalued currently. And when considering the strength of its earnings outlook, AA sticks out at as one of the market's strongest value stocks.