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.
Considering these trends, value investing is clearly one of the most preferred ways to find strong stocks in any type of 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 Smart & Final Stores . SFS is currently sporting a Zacks Rank of #2 (Buy), as well as an A grade for Value. The stock is trading with a P/E ratio of 14.71, which compares to its industry's average of 16.21. Over the last 12 months, SFS's Forward P/E has been as high as 17.75 and as low as 9.85, with a median of 12.64.
Another notable valuation metric for SFS is its P/B ratio of 1.20. The P/B ratio is used to compare a stock's market value with 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 1.75. SFS's P/B has been as high as 1.63 and as low as 0.83, with a median of 1.05, over the past year.
Finally, we should also recognize that SFS has a P/CF ratio of 3.44. 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 9.44. Within the past 12 months, SFS's P/CF has been as high as 4.56 and as low as 2.31, with a median of 2.97.
These are only a few of the key metrics included in Smart & Final Stores'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, SFS looks like an impressive value stock at the moment.