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 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 W&T Offshore (WTI - Free Report) . WTI is currently sporting a Zacks Rank of #2 (Buy), as well as a Value grade of A. The stock holds a P/E ratio of 7.26, while its industry has an average P/E of 11.26. WTI's Forward P/E has been as high as 32.31 and as low as 5.88, with a median of 9.66, all within the past year.
Value investors also use the P/S ratio. The P/S ratio is is calculated as price divided by 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. WTI has a P/S ratio of 1.5. This compares to its industry's average P/S of 1.91.
Finally, we should also recognize that WTI has a P/CF ratio of 2.94. 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. This company's current P/CF looks solid when compared to its industry's average P/CF of 4.74. Over the past 52 weeks, WTI's P/CF has been as high as 5.56 and as low as 1.55, with a median of 3.43.
These figures are just a handful of the metrics value investors tend to look at, but they help show that W&T Offshore is likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, WTI feels like a great value stock at the moment.