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.
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 rely on traditional forms of analysis on key valuation metrics to find stocks that they believe are undervalued, leaving room for profits.
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.
Hewlett Packard Enterprise (HPE - Free Report) is a stock many investors are watching right now. HPE is currently sporting a Zacks Rank of #2 (Buy), as well as an A grade for Value. The stock is trading with P/E ratio of 8.14 right now. For comparison, its industry sports an average P/E of 9.33. Over the past year, HPE's Forward P/E has been as high as 11.15 and as low as 7.72, with a median of 9.78.
HPE is also sporting a PEG ratio of 1.26. 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. HPE's PEG compares to its industry's average PEG of 1.68. Over the past 52 weeks, HPE's PEG has been as high as 1.93 and as low as 0.83, with a median of 1.19.
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. HPE has a P/S ratio of 0.63. This compares to its industry's average P/S of 1.73.
Finally, investors should note that HPE has a P/CF ratio of 6.68. 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. This stock's P/CF looks attractive against its industry's average P/CF of 9.68. Within the past 12 months, HPE's P/CF has been as high as 7.46 and as low as 3.84, with a median of 4.62.
These are only a few of the key metrics included in Hewlett Packard Enterprise'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, HPE looks like an impressive value stock at the moment.