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.
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 fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.
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 Target (TGT - Free Report) . TGT is currently holding a Zacks Rank of #2 (Buy) and a Value grade of A. The stock holds a P/E ratio of 16.74, while its industry has an average P/E of 22.99. TGT's Forward P/E has been as high as 17.34 and as low as 10.95, with a median of 13.71, all within the past year.
We also note that TGT holds a PEG ratio of 2.37. 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. TGT's industry currently sports an average PEG of 2.40. Over the last 12 months, TGT's PEG has been as high as 2.45 and as low as 1.83, with a median of 2.11.
Another valuation metric that we should highlight is TGT's P/B ratio of 4.61. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. TGT's current P/B looks attractive when compared to its industry's average P/B of 11.34. Over the past 12 months, TGT's P/B has been as high as 4.74 and as low as 2.88, with a median of 3.71.
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 popular metric because sales are harder to manipulate on an income statement, so they are often considered a better performance indicator. TGT has a P/S ratio of 0.71. This compares to its industry's average P/S of 0.78.
Finally, we should also recognize that TGT has a P/CF ratio of 9.74. 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 22.63. Within the past 12 months, TGT's P/CF has been as high as 10.02 and as low as 5.68, with a median of 7.70.
These are just a handful of the figures considered in Target'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 TGT is an impressive value stock right now.