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.
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.
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 to watch right now is China Yuchai (CYD - Free Report) . CYD is currently sporting a Zacks Rank of #1 (Strong Buy), as well as an A grade for Value. The stock is trading with P/E ratio of 4.99 right now. For comparison, its industry sports an average P/E of 10.60. Over the last 12 months, CYD's Forward P/E has been as high as 8.10 and as low as 4.67, with a median of 6.28.
Value investors also frequently use the P/S ratio. This metric is found by dividing a stock's price with the company's revenue. Some people prefer this metric because sales are harder to manipulate on an income statement. This means it could be a truer performance indicator. CYD has a P/S ratio of 0.24. This compares to its industry's average P/S of 0.4.
Finally, our model also underscores that CYD has a P/CF ratio of 3.57. 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. CYD's current P/CF looks attractive when compared to its industry's average P/CF of 5.93. Within the past 12 months, CYD's P/CF has been as high as 4.72 and as low as 2.24, with a median of 3.59.
These figures are just a handful of the metrics value investors tend to look at, but they help show that China Yuchai is likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, CYD feels like a great value stock at the moment.