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 a variety of methods, including tried-and-true valuation metrics, to find these stocks.
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 stock to keep an eye on is OneMain Holdings (OMF - Free Report) . OMF is currently holding a Zacks Rank of #1 (Strong Buy) and a Value grade of A. The stock is trading with a P/E ratio of 5.46, which compares to its industry's average of 7.31. Over the last 12 months, OMF's Forward P/E has been as high as 7.08 and as low as 4.17, with a median of 5.63.
Investors will also notice that OMF has a PEG ratio of 0.55. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. OMF's industry has an average PEG of 0.71 right now. Over the last 12 months, OMF's PEG has been as high as 0.81 and as low as 0.51, with a median of 0.61.
Value investors also use the P/S ratio. The P/S ratio is is calculated as price divided by sales. This is a prefered metric because revenue can't really be manipulated, so sales are often a truer performance indicator. OMF has a P/S ratio of 1.12. This compares to its industry's average P/S of 1.24.
These are only a few of the key metrics included in OneMain Holdings'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, OMF looks like an impressive value stock at the moment.