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Are Investors Undervaluing ADT (ADT) Right Now?

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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, value investing is easily one of the most popular ways to find great stocks in any market environment. Value investors rely on traditional forms of analysis on key valuation metrics to find stocks that they believe are undervalued, leaving room for profits.

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 to watch right now is ADT (ADT - Free Report) . ADT is currently sporting a Zacks Rank of #2 (Buy) and an A for Value. The stock is trading with P/E ratio of 9.36 right now. For comparison, its industry sports an average P/E of 19.60. Over the past 52 weeks, ADT's Forward P/E has been as high as 18.42 and as low as 8.03, with a median of 10.31.

Another notable valuation metric for ADT is its P/B ratio of 1.76. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. ADT's current P/B looks attractive when compared to its industry's average P/B of 3.72. Within the past 52 weeks, ADT's P/B has been as high as 1.96 and as low as 1.49, with a median of 1.70.

Value investors also frequently use the P/S ratio. This metric is found by dividing a stock's price with the company's revenue. This is a popular metric because sales are harder to manipulate on an income statement, so they are often considered a better performance indicator. ADT has a P/S ratio of 1.26. This compares to its industry's average P/S of 1.71.

These are just a handful of the figures considered in ADT'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 ADT is an impressive value stock right now.


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