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 tried-and-true metrics and fundamental analysis to find companies that they believe are undervalued at their current share price levels.
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.
Allison Transmission (ALSN - Free Report) is a stock many investors are watching right now. ALSN 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 9.40 right now. For comparison, its industry sports an average P/E of 11. Over the last 12 months, ALSN's Forward P/E has been as high as 11.84 and as low as 8.35, with a median of 10.04.
ALSN is also sporting a PEG ratio of 0.94. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. ALSN's PEG compares to its industry's average PEG of 1.21. Over the last 12 months, ALSN's PEG has been as high as 1.18 and as low as 0.83, with a median of 1.
Value investors will likely look at more than just these metrics, but the above data helps show that Allison Transmission is likely undervalued currently. And when considering the strength of its earnings outlook, ALSN sticks out at as one of the market's strongest value stocks.