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.
Considering these trends, value investing is clearly one of the most preferred ways to find strong stocks in any type of market. Value investors rely on traditional forms of analysis on key valuation metrics to find stocks that they believe are undervalued, leaving room for profits.
Luckily, Zacks has developed its own Style Scores system in an effort to find stocks with specific traits. Value investors will be interested in the system's "Value" category. Stocks with both "A" grades in the Value category and high Zacks Ranks are among the strongest value stocks on the market right now.
One company value investors might notice is Encompass Health (EHC - Free Report) . EHC is currently sporting a Zacks Rank of #2 (Buy), as well as an A grade for Value. The stock holds a P/E ratio of 19.13, while its industry has an average P/E of 19.59. EHC's Forward P/E has been as high as 22.44 and as low as 15.61, with a median of 18.30, all within the past year.
Finally, we should also recognize that EHC has a P/CF ratio of 13.65. 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. EHC's P/CF compares to its industry's average P/CF of 16.62. Within the past 12 months, EHC's P/CF has been as high as 16.43 and as low as 10.46, with a median of 13.48.
These are only a few of the key metrics included in Encompass Health's strong Value grade, but they help show that the stock is likely undervalued right now. When factoring in the strength of its earnings outlook, EHC looks like an impressive value stock at the moment.