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.
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 a variety of methods, including tried-and-true valuation metrics, to find these stocks.
In addition to the Zacks Rank, investors looking for stocks with specific traits can utilize our Style Scores system. Of course, value investors will be most interested in the system's "Value" category. Stocks with "A" grades for Value and high Zacks Ranks are among the best value stocks available at any given moment.
One company value investors might notice is Arcosa (ACA - Free Report) . ACA is currently sporting a Zacks Rank of #2 (Buy), as well as an A grade for Value.
Value investors also love the P/S ratio, which is calculated by simply dividing a stock's price with the company's 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. ACA has a P/S ratio of 1.3. This compares to its industry's average P/S of 1.31.
Finally, investors will want to recognize that ACA has a P/CF ratio of 10.79. 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. ACA's P/CF compares to its industry's average P/CF of 15.55. Over the past 52 weeks, ACA's P/CF has been as high as 12.39 and as low as 7.82, with a median of 10.04.
Value investors will likely look at more than just these metrics, but the above data helps show that Arcosa is likely undervalued currently. And when considering the strength of its earnings outlook, ACA sticks out at as one of the market's strongest value stocks.