The proven Zacks Rank system focuses on earnings estimates and estimate revisions to find winning stocks. Nevertheless, we know that our readers all have their own perspectives, so we are always looking at the latest trends in value, growth, and momentum to find 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.
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.
NEXEO SOLUTIONS (NXEO - Free Report) is a stock many investors are watching right now. NXEO is currently sporting a Zacks Rank of #1 (Strong Buy), as well as an A grade for Value.
Investors should also note that NXEO holds a PEG ratio of 0.31. 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. NXEO's PEG compares to its industry's average PEG of 0.40. Over the last 12 months, NXEO's PEG has been as high as 0.98 and as low as 0.28, with a median of 0.56.
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. NXEO has a P/S ratio of 0.2. This compares to its industry's average P/S of 0.57.
These figures are just a handful of the metrics value investors tend to look at, but they help show that NEXEO SOLUTIONS is likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, NXEO feels like a great value stock at the moment.