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.
Considering these trends, value investing is clearly one of the most preferred ways to find strong stocks in any type of market. Value investors use a variety of methods, including tried-and-true valuation metrics, to find these stocks.
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 stock to keep an eye on is ARC Document Solutions . ARC is currently sporting a Zacks Rank of #1 (Strong Buy), as well as a Value grade of A. The stock is trading with P/E ratio of 13.90 right now. For comparison, its industry sports an average P/E of 17.12. ARC's Forward P/E has been as high as 26.82 and as low as 13.68, with a median of 19.62, all within 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 popular metric because sales are harder to manipulate on an income statement, so they are often considered a better performance indicator. ARC has a P/S ratio of 0.28. This compares to its industry's average P/S of 0.56.
Finally, investors will want to recognize that ARC has a P/CF ratio of 2.45. This data point considers a firm's operating cash flow and is frequently used to find companies that are undervalued when considering their solid cash outlook. This company's current P/CF looks solid when compared to its industry's average P/CF of 8.19. ARC's P/CF has been as high as 5.44 and as low as 2.19, with a median of 3.49, all within the past year.
These figures are just a handful of the metrics value investors tend to look at, but they help show that ARC Document Solutions is likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, ARC feels like a great value stock at the moment.