Here at Zacks, our focus is on the proven Zacks Rank system, which emphasizes earnings estimates and estimate revisions to find great stocks. Nevertheless, we are always paying attention to the latest value, growth, and momentum trends to underscore strong picks.
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.
Luckily, Zacks has developed its own Style Scores system in an effort to find stocks with specific traits. Value investors will be interested in the system's "Value" category. Stocks with both "A" grades in the Value category and high Zacks Ranks are among the strongest value stocks on the market right now.
Diodes (DIOD - Free Report) is a stock many investors are watching right now. DIOD is currently sporting a Zacks Rank of #2 (Buy), as well as an A grade for Value.
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. DIOD has a P/S ratio of 1.62. This compares to its industry's average P/S of 2.22.
Finally, we should also recognize that DIOD has a P/CF ratio of 8.81. This data point considers a firm's operating cash flow and is frequently used to find companies that are undervalued when considering their solid cash outlook. This stock's P/CF looks attractive against its industry's average P/CF of 23.24. Within the past 12 months, DIOD's P/CF has been as high as 14 and as low as 7.16, with a median of 8.76.
These are just a handful of the figures considered in Diodes's great Value grade. Still, they help show that the stock is likely being undervalued at the moment. Add this to the strength of its earnings outlook, and we can clearly see that DIOD is an impressive value stock right now.