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.
Of these, perhaps no stock market trend is more popular than value investing, which is a strategy that has proven to be successful in all sorts of market environments. Value investors use a variety of methods, including tried-and-true valuation metrics, to find these stocks.
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.
One company to watch right now is Hewlett Packard Enterprise (HPE - Free Report) . HPE is currently sporting a Zacks Rank of #2 (Buy), as well as a Value grade of A. The stock is trading with P/E ratio of 8.36 right now. For comparison, its industry sports an average P/E of 10.48. Over the last 12 months, HPE's Forward P/E has been as high as 10.31 and as low as 7.23, with a median of 8.61.
Investors will also notice that HPE has a PEG ratio of 1.25. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. HPE's industry has an average PEG of 1.70 right now. HPE's PEG has been as high as 1.93 and as low as 1.14, with a median of 1.31, all within the past year.
Value investors also frequently use the P/S ratio. This metric is found by dividing a stock's price with the company's revenue. This is a popular metric because sales are harder to manipulate on an income statement, so they are often considered a better performance indicator. HPE has a P/S ratio of 0.7. This compares to its industry's average P/S of 1.77.
Finally, we should also recognize that HPE has a P/CF ratio of 5.82. This figure highlights a company's operating cash flow and can be used to find firms that are undervalued when considering their impressive cash outlook. HPE's current P/CF looks attractive when compared to its industry's average P/CF of 10.42. Over the past 52 weeks, HPE's P/CF has been as high as 8.91 and as low as 4.21, with a median of 6.84.
These are only a few of the key metrics included in Hewlett Packard Enterprise'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, HPE looks like an impressive value stock at the moment.