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, value investing is easily one of the most popular ways to find great stocks in any market environment. 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.
One company value investors might notice 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 8.53 right now. For comparison, its industry sports an average P/E of 15.55. Over the past year, HPQ's Forward P/E has been as high as 12.60 and as low as 8.40, with a median of 9.66.
Value investors also love the P/S ratio, which is calculated by simply dividing a stock's price with the company's sales. This is a popular metric because sales are harder to manipulate on an income statement, so they are often considered a better performance indicator. HPQ has a P/S ratio of 0.48. This compares to its industry's average P/S of 0.86.
Finally, investors should note that HPQ has a P/CF ratio of 6.41. 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. HPQ's P/CF compares to its industry's average P/CF of 11.36. HPQ's P/CF has been as high as 8.52 and as low as 5.29, with a median of 6.74, all within the past year.
These are only a few of the key metrics included in HP'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, HPQ looks like an impressive value stock at the moment.