Here at Zacks, we focus on our proven ranking system, which places an emphasis on earnings estimates and estimate revisions, to find winning stocks. But we also understand that investors develop their own strategies, so we are constantly looking at the latest trends in value, growth, and momentum to find strong companies for our readers.
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.
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 to watch right now is Arconic (ARNC - Free Report) . ARNC is currently sporting a Zacks Rank of #2 (Buy), as well as an A grade for Value. The stock is trading with P/E ratio of 10.65 right now. For comparison, its industry sports an average P/E of 11.19. ARNC's Forward P/E has been as high as 25 and as low as 10.10, with a median of 14.26, 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. ARNC has a P/S ratio of 0.59. This compares to its industry's average P/S of 1.35.
Value investors will likely look at more than just these metrics, but the above data helps show that Arconic is likely undervalued currently. And when considering the strength of its earnings outlook, ARNC sticks out at as one of the market's strongest value stocks.