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 fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.
On top of the Zacks Rank, investors can also look at our innovative Style Scores system to find stocks with specific traits. For example, value investors will want to focus on the "Value" category. Stocks with high Zacks Ranks and "A" grades for Value will be some of the highest-quality value stocks on the market today.
CDW (CDW - Free Report) is a stock many investors are watching right now. CDW is currently sporting a Zacks Rank of #2 (Buy) and an A for Value. The stock is trading with a P/E ratio of 17.64, which compares to its industry's average of 19.31. Over the past 52 weeks, CDW's Forward P/E has been as high as 18.77 and as low as 13.65, with a median of 16.55.
Value investors also use the P/S ratio. The P/S ratio is is calculated as price divided by sales. This is a prefered metric because revenue can't really be manipulated, so sales are often a truer performance indicator. CDW has a P/S ratio of 0.93. This compares to its industry's average P/S of 2.13.
Finally, our model also underscores that CDW has a P/CF ratio of 16.89. 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. This company's current P/CF looks solid when compared to its industry's average P/CF of 41.77. Within the past 12 months, CDW's P/CF has been as high as 17.48 and as low as 12.27, with a median of 15.08.
These are only a few of the key metrics included in CDW'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, CDW looks like an impressive value stock at the moment.