Here at Zacks, we focus on our proven ranking system, which places an emphasis on earnings estimates and estimate revisions, to find winning stocks. But we also understand that investors develop their own strategies, so we are constantly looking at the latest trends in value, growth, and momentum to find strong companies for our readers.
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.
One stock to keep an eye on is Tech Data (TECD - Free Report) . TECD is currently holding a Zacks Rank of #2 (Buy) and a Value grade of A. The stock is trading with a P/E ratio of 9.10, which compares to its industry's average of 9.75. TECD's Forward P/E has been as high as 9.27 and as low as 6.44, with a median of 7.65, all within the past year.
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 prefered metric because revenue can't really be manipulated, so sales are often a truer performance indicator. TECD has a P/S ratio of 0.11. This compares to its industry's average P/S of 0.24.
Finally, our model also underscores that TECD has a P/CF ratio of 7.41. This data point considers a firm's operating cash flow and is frequently used to find companies that are undervalued when considering their solid cash outlook. TECD's P/CF compares to its industry's average P/CF of 10.18. Over the past 52 weeks, TECD's P/CF has been as high as 12.38 and as low as 6.43, with a median of 9.11.
These are just a handful of the figures considered in Tech Data's great Value grade. Still, they help show that the stock is likely being undervalued at the moment. Add this to the strength of its earnings outlook, and we can clearly see that TECD is an impressive value stock right now.