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, 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 rely on traditional forms of analysis on key valuation metrics to find stocks that they believe are undervalued, leaving room for profits.
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.
One company value investors might notice is American Outdoor Brands . AOBC is currently sporting a Zacks Rank of #1 (Strong Buy), as well as a Value grade of A.
Value investors also use the P/S ratio. The P/S ratio is is calculated as price divided by sales. This is a prefered metric because revenue can't really be manipulated, so sales are often a truer performance indicator. AOBC has a P/S ratio of 0.83. This compares to its industry's average P/S of 1.3.
Finally, investors should note that AOBC has a P/CF ratio of 7.52. 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. AOBC's current P/CF looks attractive when compared to its industry's average P/CF of 28.70. Within the past 12 months, AOBC's P/CF has been as high as 8.88 and as low as 4.14, with a median of 6.36.
Value investors will likely look at more than just these metrics, but the above data helps show that American Outdoor Brands is likely undervalued currently. And when considering the strength of its earnings outlook, AOBC sticks out at as one of the market's strongest value stocks.