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.
Looking at the history of these trends, perhaps none is more beloved than value investing. This strategy simply looks to identify companies that are being undervalued by the broader market. Value investors rely on traditional forms of analysis on key valuation metrics to find stocks that they believe are undervalued, leaving room for profits.
Zacks has developed the innovative Style Scores system to highlight stocks with specific traits. For example, value investors will be interested in stocks with great grades in the "Value" category. When paired with a high Zacks Rank, "A" grades in the Value category are among the strongest value stocks on the market today.
One company to watch right now is Allstate (ALL - Free Report) . ALL is currently sporting a Zacks Rank of #2 (Buy) and an A for Value. The stock has a Forward P/E ratio of 10.76. This compares to its industry's average Forward P/E of 24.77. Over the past year, ALL's Forward P/E has been as high as 11.46 and as low as 8.42, with a median of 10.24.
ALL is also sporting a PEG ratio of 1.29. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. ALL's PEG compares to its industry's average PEG of 2.99. ALL's PEG has been as high as 1.38 and as low as 1.01, with a median of 1.23, all within the past year.
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. ALL has a P/S ratio of 0.84. This compares to its industry's average P/S of 1.14.
Finally, we should also recognize that ALL has a P/CF ratio of 11.16. 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 stock's P/CF looks attractive against its industry's average P/CF of 13.54. Over the past 52 weeks, ALL's P/CF has been as high as 11.94 and as low as 6.08, with a median of 10.62.
These are only a few of the key metrics included in Allstate'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, ALL looks like an impressive value stock at the moment.