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.
Looking at the history of these trends, perhaps none is more beloved than value investing. This strategy simply looks to identify companies that are being undervalued by the broader market. Value investors use fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.
In addition to the Zacks Rank, investors looking for stocks with specific traits can utilize our Style Scores system. Of course, value investors will be most interested in the system's "Value" category. Stocks with "A" grades for Value and high Zacks Ranks are among the best value stocks available at any given moment.
One company to watch right now is Advanced Energy Industries (AEIS - Free Report) . AEIS is currently sporting a Zacks Rank of #2 (Buy) and an A for Value. The stock has a Forward P/E ratio of 9.93. This compares to its industry's average Forward P/E of 13.07. AEIS's Forward P/E has been as high as 20.42 and as low as 9.72, with a median of 12.41, all within the past year.
Investors should also recognize that AEIS has a P/B ratio of 3.39. 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 8.09. Over the past 12 months, AEIS's P/B has been as high as 6.87 and as low as 3.32, with a median of 4.75.
Finally, we should also recognize that AEIS has a P/CF ratio of 12.93. 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. AEIS's current P/CF looks attractive when compared to its industry's average P/CF of 20.71. Over the past 52 weeks, AEIS's P/CF has been as high as 21.08 and as low as 12.30, with a median of 15.53.
These figures are just a handful of the metrics value investors tend to look at, but they help show that Advanced Energy Industries is likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, AEIS feels like a great value stock at the moment.