Here at Zacks, our focus is on the proven Zacks Rank system, which emphasizes earnings estimates and estimate revisions to find great stocks. Nevertheless, we are always paying attention to the latest value, growth, and momentum trends to underscore 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 fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.
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.
Laredo Petroleum (LPI - Free Report) is a stock many investors are watching right now. LPI is currently sporting a Zacks Rank of #2 (Buy), as well as a Value grade of A.
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. LPI has a P/S ratio of 0.54. This compares to its industry's average P/S of 1.03.
Finally, investors will want to recognize that LPI has a P/CF ratio of 1.27. 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. LPI's current P/CF looks attractive when compared to its industry's average P/CF of 4.94. Over the past year, LPI's P/CF has been as high as 3.24 and as low as 0.90, with a median of 1.70.
These are only a few of the key metrics included in Laredo Petroleum'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, LPI looks like an impressive value stock at the moment.