The proven Zacks Rank system focuses on earnings estimates and estimate revisions to find winning stocks. Nevertheless, we know that our readers all have their own perspectives, so we are always looking at the latest trends in value, growth, and momentum to find strong picks.
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.
On top of the Zacks Rank, investors can also look at our innovative Style Scores system to find stocks with specific traits. For example, value investors will want to focus on the "Value" category. Stocks with high Zacks Ranks and "A" grades for Value will be some of the highest-quality value stocks on the market today.
One company value investors might notice is Big Lots (BIG). BIG 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 11.88, while its industry has an average P/E of 27.76. Over the last 12 months, BIG's Forward P/E has been as high as 12.62 and as low as 6.59, with a median of 8.21.
BIG is also sporting a PEG ratio of 1.06. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. BIG's PEG compares to its industry's average PEG of 2.73. BIG's PEG has been as high as 3.78 and as low as 0.63, with a median of 1.06, 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. Some people prefer this metric because sales are harder to manipulate on an income statement. This means it could be a truer performance indicator. BIG has a P/S ratio of 0.4. This compares to its industry's average P/S of 1.12.
These figures are just a handful of the metrics value investors tend to look at, but they help show that Big Lots is likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, BIG feels like a great value stock at the moment.