The proven Zacks Rank system focuses on earnings estimates and estimate revisions to find winning stocks. Nevertheless, we know that our readers all have their own perspectives, so we are always looking at the latest trends in value, growth, and momentum to find strong picks.
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 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.
One stock to keep an eye on is Office Depot (ODP - Free Report) . ODP is currently holding a Zacks Rank of #2 (Buy) and a Value grade of A. The stock has a Forward P/E ratio of 5.57. This compares to its industry's average Forward P/E of 13.05. Over the past year, ODP's Forward P/E has been as high as 9.14 and as low as 3.19, with a median of 5.67.
Investors will also notice that ODP has a PEG ratio of 0.50. 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. ODP's PEG compares to its industry's average PEG of 1.27. Over the past 52 weeks, ODP's PEG has been as high as 0.64 and as low as 0.29, with a median of 0.46.
Finally, investors will want to recognize that ODP has a P/CF ratio of 5.42. 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. This company's current P/CF looks solid when compared to its industry's average P/CF of 19.80. Over the past 52 weeks, ODP's P/CF has been as high as 7.69 and as low as 3.14, with a median of 5.03.
These figures are just a handful of the metrics value investors tend to look at, but they help show that Office Depot is likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, ODP feels like a great value stock at the moment.