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.
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 rely on traditional forms of analysis on key valuation metrics to find stocks that they believe are undervalued, leaving room for profits.
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 stock to keep an eye on is HP (HPQ - Free Report) . HPQ is currently sporting a Zacks Rank of #2 (Buy), as well as a Value grade of A. The stock is trading with P/E ratio of 9.41 right now. For comparison, its industry sports an average P/E of 15.83. Over the last 12 months, HPQ's Forward P/E has been as high as 12.60 and as low as 8.40, with a median of 10.11.
Value investors also use the P/S ratio. The P/S ratio is is calculated as price divided by 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. HPQ has a P/S ratio of 0.54. This compares to its industry's average P/S of 1.03.
Finally, our model also underscores that HPQ has a P/CF ratio of 7.06. 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. HPQ's current P/CF looks attractive when compared to its industry's average P/CF of 11.51. HPQ's P/CF has been as high as 8.52 and as low as 5.29, with a median of 6.76, all within the past year.
These are just a handful of the figures considered in HP's great Value grade. Still, they help show that the stock is likely being undervalued at the moment. Add this to the strength of its earnings outlook, and we can clearly see that HPQ is an impressive value stock right now.