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.
Of these, value investing is easily one of the most popular ways to find great stocks in any market environment. 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 Allstate (ALL - Free Report) . ALL is currently holding a Zacks Rank of #1 (Strong Buy) and a Value grade of A. The stock is trading with P/E ratio of 10.56 right now. For comparison, its industry sports an average P/E of 24.97. Over the past year, ALL's Forward P/E has been as high as 11.46 and as low as 8.42, with a median of 10.27.
Investors should also note that ALL holds a PEG ratio of 1.27. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. ALL's industry currently sports an average PEG of 3.02. Over the last 12 months, ALL's PEG has been as high as 1.38 and as low as 1.01, with a median of 1.23.
Value investors also love the P/S ratio, which is calculated by simply dividing a stock's price with the company's sales. Some people prefer this metric because sales are harder to manipulate on an income statement. This means it could be a truer performance indicator. ALL has a P/S ratio of 0.81. This compares to its industry's average P/S of 1.12.
Finally, we should also recognize that ALL has a P/CF ratio of 11.04. 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. ALL's P/CF compares to its industry's average P/CF of 13.64. Within the past 12 months, ALL's P/CF has been as high as 11.94 and as low as 6.08, with a median of 10.72.
Value investors will likely look at more than just these metrics, but the above data helps show that Allstate is likely undervalued currently. And when considering the strength of its earnings outlook, ALL sticks out at as one of the market's strongest value stocks.