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, value investing is easily one of the most popular ways to find great stocks in any market environment. Value investors use fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.
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 stock to keep an eye on is CIT Group (CIT - Free Report) . CIT is currently sporting a Zacks Rank of #2 (Buy) and an A for Value. The stock is trading with P/E ratio of 8.64 right now. For comparison, its industry sports an average P/E of 10.84. Over the past 52 weeks, CIT's Forward P/E has been as high as 10.61 and as low as 7.75, with a median of 9.26.
CIT is also sporting a PEG ratio of 0.86. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. CIT's PEG compares to its industry's average PEG of 1.21. Over the last 12 months, CIT's PEG has been as high as 1.06 and as low as 0.78, with a median of 0.93.
Another valuation metric that we should highlight is CIT's P/B ratio of 0.74. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. This company's current P/B looks solid when compared to its industry's average P/B of 1.93. Over the past year, CIT's P/B has been as high as 0.96 and as low as 0.69, with a median of 0.84.
Value investors also use the P/S ratio. The P/S ratio is is calculated as price divided by 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. CIT has a P/S ratio of 1.3. This compares to its industry's average P/S of 1.62.
Finally, investors will want to recognize that CIT has a P/CF ratio of 4.99. 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. CIT's current P/CF looks attractive when compared to its industry's average P/CF of 6.40. Over the past 52 weeks, CIT's P/CF has been as high as 6.77 and as low as 4.72, with a median of 5.83.
Value investors will likely look at more than just these metrics, but the above data helps show that CIT Group is likely undervalued currently. And when considering the strength of its earnings outlook, CIT sticks out at as one of the market's strongest value stocks.