Here at Zacks, our focus is on the proven Zacks Rank system, which emphasizes earnings estimates and estimate revisions to find great stocks. Nevertheless, we are always paying attention to the latest value, growth, and momentum trends to underscore strong picks.
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 fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.
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.
Scientific Games (SGMS - Free Report) is a stock many investors are watching right now. SGMS is currently sporting a Zacks Rank of #2 (Buy), as well as a Value grade of A.
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. SGMS has a P/S ratio of 0.77. This compares to its industry's average P/S of 1.52.
Finally, investors will want to recognize that SGMS has a P/CF ratio of 3.36. This metric focuses on a firm's operating cash flow and is often used to find stocks that are undervalued based on the strength of their cash outlook. This stock's P/CF looks attractive against its industry's average P/CF of 13.30. SGMS's P/CF has been as high as 8.25 and as low as 2.26, with a median of 3.77, all within the past year.
These are just a handful of the figures considered in Scientific Games's great Value grade. Still, they help show that the stock is likely being undervalued at the moment. Add this to the strength of its earnings outlook, and we can clearly see that SGMS is an impressive value stock right now.