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.
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.
One company value investors might notice is Chaparral Energy, Inc. . CHAP 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 12.50, which compares to its industry's average of 15.21. Over the past year, CHAP's Forward P/E has been as high as 72.96 and as low as 4.67, with a median of 27.90.
Value investors also love the P/S ratio, which is calculated by simply dividing a stock's price with the company's sales. Some people prefer this metric because sales are harder to manipulate on an income statement. This means it could be a truer performance indicator. CHAP has a P/S ratio of 1.37. This compares to its industry's average P/S of 1.52.
Finally, investors will want to recognize that CHAP has a P/CF ratio of 2.65. 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. CHAP's P/CF compares to its industry's average P/CF of 5.10. Over the past year, CHAP's P/CF has been as high as 3.06 and as low as -2,585.67, with a median of -12.05.
These are only a few of the key metrics included in Chaparral Energy, Inc.'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, CHAP looks like an impressive value stock at the moment.