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 use tried-and-true metrics and fundamental analysis to find companies that they believe are undervalued at their current share price levels.
Luckily, Zacks has developed its own Style Scores system in an effort to find stocks with specific traits. Value investors will be interested in the system's "Value" category. Stocks with both "A" grades in the Value category and high Zacks Ranks are among the strongest value stocks on the market right now.
One company to watch right now is Builders FirstSource (BLDR - Free Report) . BLDR is currently sporting a Zacks Rank of #2 (Buy), as well as a Value grade of A. The stock holds a P/E ratio of 10.06, while its industry has an average P/E of 17.97. Over the past 52 weeks, BLDR's Forward P/E has been as high as 10.40 and as low as 5.62, with a median of 7.77.
Value investors also frequently use the P/S ratio. This metric is found by dividing a stock's price with the company's revenue. This is a popular metric because sales are harder to manipulate on an income statement, so they are often considered a better performance indicator. BLDR has a P/S ratio of 0.25. This compares to its industry's average P/S of 0.53.
Finally, investors should note that BLDR has a P/CF ratio of 6.08. 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. BLDR's current P/CF looks attractive when compared to its industry's average P/CF of 13.31. BLDR's P/CF has been as high as 15.62 and as low as 4.13, with a median of 7.17, all within the past year.
Value investors will likely look at more than just these metrics, but the above data helps show that Builders FirstSource is likely undervalued currently. And when considering the strength of its earnings outlook, BLDR sticks out at as one of the market's strongest value stocks.