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.
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 use tried-and-true metrics and fundamental analysis to find companies that they believe are undervalued at their current share price levels.
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.
Foot Locker (FL - Free Report) is a stock many investors are watching right now. FL is currently sporting a Zacks Rank of #1 (Strong Buy), as well as an A grade for Value. The stock is trading with a P/E ratio of 11.99, which compares to its industry's average of 14.70. Over the last 12 months, FL's Forward P/E has been as high as 12.85 and as low as 9.08, with a median of 10.89.
We also note that FL holds a PEG ratio of 1.27. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. FL's industry has an average PEG of 1.32 right now. Over the last 12 months, FL's PEG has been as high as 2.28 and as low as 1.18, with a median of 1.56.
Another notable valuation metric for FL is its P/B ratio of 2.85. 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. FL's current P/B looks attractive when compared to its industry's average P/B of 3.51. Over the past 12 months, FL's P/B has been as high as 2.90 and as low as 1.93, with a median of 2.45.
These are only a few of the key metrics included in Foot Locker'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, FL looks like an impressive value stock at the moment.