The proven Zacks Rank system focuses on earnings estimates and estimate revisions to find winning stocks. Nevertheless, we know that our readers all have their own perspectives, so we are always looking at the latest trends in value, growth, and momentum to find strong picks.
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.
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 DXP Enterprises (DXPE - Free Report) . DXPE is currently sporting a Zacks Rank of #2 (Buy), as well as an A grade for Value. The stock holds a P/E ratio of 12.45, while its industry has an average P/E of 17.67. DXPE's Forward P/E has been as high as 32.08 and as low as 12.07, with a median of 16.27, all within the past year.
Investors should also note that DXPE holds a PEG ratio of 0.71. 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. DXPE's industry has an average PEG of 1.57 right now. Within the past year, DXPE's PEG has been as high as 1 and as low as 0.69, with a median of 0.78.
Another valuation metric that we should highlight is DXPE's P/B ratio of 1.72. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. DXPE's current P/B looks attractive when compared to its industry's average P/B of 4.65. DXPE's P/B has been as high as 2.96 and as low as 1.59, with a median of 2.04, over the past year.
Value investors also frequently use the P/S ratio. This metric is found by dividing a stock's price with the company's revenue. This is a prefered metric because revenue can't really be manipulated, so sales are often a truer performance indicator. DXPE has a P/S ratio of 0.44. This compares to its industry's average P/S of 1.18.
Finally, investors will want to recognize that DXPE has a P/CF ratio of 8.86. 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. This stock's P/CF looks attractive against its industry's average P/CF of 14.79. DXPE's P/CF has been as high as 16.31 and as low as 8.07, with a median of 10.51, all within the past year.
These are only a few of the key metrics included in DXP Enterprises'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, DXPE looks like an impressive value stock at the moment.