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.
Of these, perhaps no stock market trend is more popular than value investing, which is a strategy that has proven to be successful in all sorts of market environments. 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 J. Alexander's (JAX - Free Report) . JAX 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 16.78 right now. For comparison, its industry sports an average P/E of 23.54. Over the past year, JAX's Forward P/E has been as high as 23.70 and as low as 13.57, with a median of 18.18.
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. JAX has a P/S ratio of 0.61. This compares to its industry's average P/S of 1.01.
Finally, investors will want to recognize that JAX has a P/CF ratio of 9.48. This metric takes into account a company's operating cash flow and can be used to find stocks that are undervalued based on their solid cash outlook. JAX's P/CF compares to its industry's average P/CF of 17.23. JAX's P/CF has been as high as 11.04 and as low as 5.96, with a median of 8.87, all within the past year.
These are only a few of the key metrics included in J. Alexander's'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, JAX looks like an impressive value stock at the moment.