While the proven Zacks Rank places an emphasis on earnings estimates and estimate revisions to find strong stocks, we also know that investors tend to develop their own individual strategies. With this in mind, we are always looking at value, growth, and momentum trends to discover great companies.
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 to watch right now is Fiat Chrysler (FCAU - Free Report) . FCAU is currently sporting a Zacks Rank of #2 (Buy), as well as a Value grade of A. The stock is trading with a P/E ratio of 4.55, which compares to its industry's average of 7.95. Over the past year, FCAU's Forward P/E has been as high as 6 and as low as 3.99, with a median of 4.91.
Investors should also recognize that FCAU has a P/B ratio of 0.80. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. This stock's P/B looks attractive against its industry's average P/B of 1.28. Over the past year, FCAU's P/B has been as high as 1.30 and as low as 0.79, with a median of 0.99.
Value investors also frequently use the P/S ratio. This metric is found by dividing a stock's price with the company's revenue. Some people prefer this metric because sales are harder to manipulate on an income statement. This means it could be a truer performance indicator. FCAU has a P/S ratio of 0.19. This compares to its industry's average P/S of 0.35.
Finally, our model also underscores that FCAU has a P/CF ratio of 1.41. 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. FCAU's current P/CF looks attractive when compared to its industry's average P/CF of 4.02. Over the past year, FCAU's P/CF has been as high as 2.82 and as low as 1.39, with a median of 2.19.
Value investors will likely look at more than just these metrics, but the above data helps show that Fiat Chrysler is likely undervalued currently. And when considering the strength of its earnings outlook, FCAU sticks out at as one of the market's strongest value stocks.