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.
Looking at the history of these trends, perhaps none is more beloved than value investing. This strategy simply looks to identify companies that are being undervalued by the broader market. Value investors use tried-and-true metrics and fundamental analysis to find companies that they believe are undervalued at their current share price levels.
In addition to the Zacks Rank, investors looking for stocks with specific traits can utilize our Style Scores system. Of course, value investors will be most interested in the system's "Value" category. Stocks with "A" grades for Value and high Zacks Ranks are among the best value stocks available at any given moment.
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 holds a P/E ratio of 5.86, while its industry has an average P/E of 13.32. Over the past 52 weeks, CHAP's Forward P/E has been as high as 72.96 and as low as 4.67, with a median of 20.67.
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. CHAP has a P/S ratio of 1.08. This compares to its industry's average P/S of 1.23.
Value investors will likely look at more than just these metrics, but the above data helps show that Chaparral Energy, Inc. Is likely undervalued currently. And when considering the strength of its earnings outlook, CHAP sticks out at as one of the market's strongest value stocks.