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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.
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 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 stock to keep an eye on is AES (AES - Free Report) . AES is currently sporting a Zacks Rank #2 (Buy) and an A for Value. The stock holds a P/E ratio of 5.74, while its industry has an average P/E of 15.89. Over the past 52 weeks, AES's Forward P/E has been as high as 10.04 and as low as 4.38, with a median of 5.79.
We also note that AES holds a PEG ratio of 0.51. 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. AES's industry currently sports an average PEG of 1.40. Over the last 12 months, AES's PEG has been as high as 1.89 and as low as 0.51, with a median of 1.41.
Another valuation metric that we should highlight is AES's P/B ratio of 1.21. 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 stock's P/B looks attractive against its industry's average P/B of 2.61. AES's P/B has been as high as 2.03 and as low as 0.89, with a median of 1.18, over 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 preferred metric because revenue can't really be manipulated, so sales are often a truer performance indicator. AES has a P/S ratio of 0.84. This compares to its industry's average P/S of 2.49.
Finally, investors should note that AES has a P/CF ratio of 4.12. 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 stock's P/CF looks attractive against its industry's average P/CF of 9.60. Over the past 52 weeks, AES's P/CF has been as high as 7.00 and as low as 2.41, with a median of 3.49.
Another great Utility - Electric Power stock you could consider is E.ON (EONGY - Free Report) , which is a Zacks Rank of #2 (Buy) stock with a Value Score of A.
E.ON is trading at a forward earnings multiple of 14.92 at the moment, with a PEG ratio of 5.97. This compares to its industry's average P/E of 15.89 and average PEG ratio of 1.40.
Over the past year, EONGY's P/E has been as high as 16.12, as low as 9.27, with a median of 12.41; its PEG ratio has been as high as 7.50, as low as 3.69, with a median of 5.86 during the same time period.
Additionally, E.ON has a P/B ratio of 1.78 while its industry's price-to-book ratio sits at 2.61. For EONGY, this valuation metric has been as high as 1.86, as low as 1.08, with a median of 1.55 over the past year.
These figures are just a handful of the metrics value investors tend to look at, but they help show that AES and E.ON are likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, AES and EONGY feels like a great value stock at the moment.
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Should Value Investors Buy AES (AES) Stock?
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.
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 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 stock to keep an eye on is AES (AES - Free Report) . AES is currently sporting a Zacks Rank #2 (Buy) and an A for Value. The stock holds a P/E ratio of 5.74, while its industry has an average P/E of 15.89. Over the past 52 weeks, AES's Forward P/E has been as high as 10.04 and as low as 4.38, with a median of 5.79.
We also note that AES holds a PEG ratio of 0.51. 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. AES's industry currently sports an average PEG of 1.40. Over the last 12 months, AES's PEG has been as high as 1.89 and as low as 0.51, with a median of 1.41.
Another valuation metric that we should highlight is AES's P/B ratio of 1.21. 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 stock's P/B looks attractive against its industry's average P/B of 2.61. AES's P/B has been as high as 2.03 and as low as 0.89, with a median of 1.18, over 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 preferred metric because revenue can't really be manipulated, so sales are often a truer performance indicator. AES has a P/S ratio of 0.84. This compares to its industry's average P/S of 2.49.
Finally, investors should note that AES has a P/CF ratio of 4.12. 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 stock's P/CF looks attractive against its industry's average P/CF of 9.60. Over the past 52 weeks, AES's P/CF has been as high as 7.00 and as low as 2.41, with a median of 3.49.
Another great Utility - Electric Power stock you could consider is E.ON (EONGY - Free Report) , which is a Zacks Rank of #2 (Buy) stock with a Value Score of A.
E.ON is trading at a forward earnings multiple of 14.92 at the moment, with a PEG ratio of 5.97. This compares to its industry's average P/E of 15.89 and average PEG ratio of 1.40.
Over the past year, EONGY's P/E has been as high as 16.12, as low as 9.27, with a median of 12.41; its PEG ratio has been as high as 7.50, as low as 3.69, with a median of 5.86 during the same time period.
Additionally, E.ON has a P/B ratio of 1.78 while its industry's price-to-book ratio sits at 2.61. For EONGY, this valuation metric has been as high as 1.86, as low as 1.08, with a median of 1.55 over the past year.
These figures are just a handful of the metrics value investors tend to look at, but they help show that AES and E.ON are likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, AES and EONGY feels like a great value stock at the moment.