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.
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 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 to watch right now is Tech Data (TECD - Free Report) . TECD is currently holding a Zacks Rank of #2 (Buy) and a Value grade of A. The stock is trading with P/E ratio of 7.98 right now. For comparison, its industry sports an average P/E of 8.82. TECD's Forward P/E has been as high as 9.27 and as low as 6.44, with a median of 8.08, all within the past year.
Another notable valuation metric for TECD is its P/B ratio of 1.26. The P/B ratio is used to compare a stock's market value with its book value, which is defined as total assets minus total liabilities. This company's current P/B looks solid when compared to its industry's average P/B of 1.27. Within the past 52 weeks, TECD's P/B has been as high as 1.39 and as low as 0.91, with a median of 1.23.
Value investors also use the P/S ratio. The P/S ratio is is calculated as price divided by 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. TECD has a P/S ratio of 0.1. This compares to its industry's average P/S of 0.24.
Finally, investors will want to recognize that TECD has a P/CF ratio of 6.62. 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. TECD's P/CF compares to its industry's average P/CF of 6.74. Over the past 52 weeks, TECD's P/CF has been as high as 9.66 and as low as 5.24, with a median of 7.01.
Value investors will likely look at more than just these metrics, but the above data helps show that Tech Data is likely undervalued currently. And when considering the strength of its earnings outlook, TECD sticks out at as one of the market's strongest value stocks.