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.
Of these, value investing is easily one of the most popular ways to find great stocks in any market environment. 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 Toll Brothers (TOL - Free Report) . TOL is currently sporting a Zacks Rank of #2 (Buy) and an A for Value. The stock holds a P/E ratio of 6.10, while its industry has an average P/E of 7.07. Over the past 52 weeks, TOL's Forward P/E has been as high as 14.58 and as low as 6.10, with a median of 9.24.
Investors should also note that TOL holds a PEG ratio of 0.38. 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. TOL's PEG compares to its industry's average PEG of 0.46. Over the past 52 weeks, TOL's PEG has been as high as 1.30 and as low as 0.38, with a median of 0.67.
Another notable valuation metric for TOL is its 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 1.15. Within the past 52 weeks, TOL's P/B has been as high as 1.89 and as low as 1.07, with a median of 1.49.
Finally, we should also recognize that TOL has a P/CF ratio of 7.50. This metric focuses on a firm's operating cash flow and is often used to find stocks that are undervalued based on the strength of their cash outlook. TOL's current P/CF looks attractive when compared to its industry's average P/CF of 11.13. TOL's P/CF has been as high as 16.19 and as low as 7.50, with a median of 11.07, all within the past year.
These are just a handful of the figures considered in Toll Brothers'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 TOL is an impressive value stock right now.