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.
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 tried-and-true metrics and fundamental analysis to find companies that they believe are undervalued at their current share price levels.
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.
Builders FirstSource (BLDR - Free Report) is a stock many investors are watching right now. BLDR is currently sporting a Zacks Rank of #2 (Buy), as well as an A grade for Value. The stock has a Forward P/E ratio of 12.40. This compares to its industry's average Forward P/E of 21.35. Over the past 52 weeks, BLDR's Forward P/E has been as high as 12.56 and as low as 6.76, with a median of 9.52.
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 prefered metric because revenue can't really be manipulated, so sales are often a truer performance indicator. BLDR has a P/S ratio of 0.43. This compares to its industry's average P/S of 0.5.
Finally, we should also recognize that BLDR has a P/CF ratio of 9.52. 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. This company's current P/CF looks solid when compared to its industry's average P/CF of 14.42. BLDR's P/CF has been as high as 9.52 and as low as 4.58, with a median of 6.03, all within the past year.
Value investors will likely look at more than just these metrics, but the above data helps show that Builders FirstSource is likely undervalued currently. And when considering the strength of its earnings outlook, BLDR sticks out at as one of the market's strongest value stocks.