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.
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.
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.
On Deck Capital (ONDK - Free Report) is a stock many investors are watching right now. ONDK is currently sporting a Zacks Rank of #2 (Buy) and an A for Value.
Another valuation metric that we should highlight is ONDK's P/B ratio of 1.56. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. This stock's P/B looks attractive against its industry's average P/B of 1.69. Over the past 12 months, ONDK's P/B has been as high as 2.42 and as low as 1.16, with a median of 1.78.
Value investors also use the P/S ratio. The P/S ratio is is calculated as price divided by sales. Some people prefer this metric because sales are harder to manipulate on an income statement. This means it could be a truer performance indicator. ONDK has a P/S ratio of 1.24. This compares to its industry's average P/S of 1.76.
Finally, our model also underscores that ONDK has a P/CF ratio of 5.53. 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. ONDK's P/CF compares to its industry's average P/CF of 10.48. ONDK's P/CF has been as high as 10.19 and as low as 5.38, with a median of 7.56, all within the past year.
Value investors will likely look at more than just these metrics, but the above data helps show that On Deck Capital is likely undervalued currently. And when considering the strength of its earnings outlook, ONDK sticks out at as one of the market's strongest value stocks.