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.
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 a variety of methods, including tried-and-true valuation metrics, to find these stocks.
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.
One stock to keep an eye on is Banco Santander-Brazil (BSBR - Free Report) . BSBR is currently sporting a Zacks Rank of #2 (Buy), as well as a Value grade of A.
BSBR is also sporting a PEG ratio of 1.06. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. BSBR's PEG compares to its industry's average PEG of 1.15. BSBR's PEG has been as high as 1.22 and as low as 0.71, with a median of 1, all within the past year.
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. BSBR has a P/S ratio of 1.74. This compares to its industry's average P/S of 1.8.
Finally, we should also recognize that BSBR has a P/CF ratio of 10.36. 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. This company's current P/CF looks solid when compared to its industry's average P/CF of 15.30. BSBR's P/CF has been as high as 13.28 and as low as 8.23, with a median of 11.12, all within the past year.
These figures are just a handful of the metrics value investors tend to look at, but they help show that Banco Santander-Brazil is likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, BSBR feels like a great value stock at the moment.