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.
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 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 Information Services Group (III - Free Report) . III is currently sporting a Zacks Rank of #1 (Strong Buy) and an A for Value. The stock is trading with a P/E ratio of 10.27, which compares to its industry's average of 22.06. Over the past 52 weeks, III's Forward P/E has been as high as 13.62 and as low as 10.19, with a median of 11.05.
Investors should also note that III holds a PEG ratio of 0.73. 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. III's PEG compares to its industry's average PEG of 1.92. III's PEG has been as high as 1.01 and as low as 0.73, with a median of 0.82, all within the past year.
Another valuation metric that we should highlight is III's P/B ratio of 2.45. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. III's current P/B looks attractive when compared to its industry's average P/B of 6.58. Over the past year, III's P/B has been as high as 3.41 and as low as 2.41, with a median of 2.75.
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 prefered metric because revenue can't really be manipulated, so sales are often a truer performance indicator. III has a P/S ratio of 0.69. This compares to its industry's average P/S of 1.42.
Finally, investors should note that III has a P/CF ratio of 14.54. 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. III's current P/CF looks attractive when compared to its industry's average P/CF of 15.14. Within the past 12 months, III's P/CF has been as high as 36.60 and as low as 14.30, with a median of 16.33.
These are only a few of the key metrics included in Information Services Group'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, III looks like an impressive value stock at the moment.