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 rely on traditional forms of analysis on key valuation metrics to find stocks that they believe are undervalued, leaving room for profits.
Luckily, Zacks has developed its own Style Scores system in an effort to find stocks with specific traits. Value investors will be interested in the system's "Value" category. Stocks with both "A" grades in the Value category and high Zacks Ranks are among the strongest value stocks on the market right now.
Newell Brands (NWL - Free Report) is a stock many investors are watching right now. NWL is currently sporting a Zacks Rank of #2 (Buy), as well as an A grade for Value. The stock has a Forward P/E ratio of 12.02. This compares to its industry's average Forward P/E of 20.70. Over the past 52 weeks, NWL's Forward P/E has been as high as 15.26 and as low as 8.64, with a median of 10.52.
Investors will also notice that NWL has a PEG ratio of 2. 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. NWL's industry has an average PEG of 2.94 right now. NWL's PEG has been as high as 3.14 and as low as 1.44, with a median of 2.01, all within the past year.
Value investors also use the P/S ratio. The P/S ratio is is calculated as price divided by 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. NWL has a P/S ratio of 0.93. This compares to its industry's average P/S of 1.36.
Finally, investors will want to recognize that NWL has a P/CF ratio of 4.66. 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 11.27. Over the past 52 weeks, NWL's P/CF has been as high as 5.06 and as low as 1.77, with a median of 2.40.
Value investors will likely look at more than just these metrics, but the above data helps show that Newell Brands is likely undervalued currently. And when considering the strength of its earnings outlook, NWL sticks out at as one of the market's strongest value stocks.