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, 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.
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 Fiesta Restaurant Group (FRGI - Free Report) . FRGI is currently sporting a Zacks Rank of #2 (Buy) and an A for Value. The stock is trading with a P/E ratio of 19.73, which compares to its industry's average of 26.27. Over the past 52 weeks, FRGI's Forward P/E has been as high as 23.02 and as low as 12.81, with a median of 18.18.
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 popular metric because sales are harder to manipulate on an income statement, so they are often considered a better performance indicator. FRGI has a P/S ratio of 0.42. This compares to its industry's average P/S of 0.96.
Finally, investors should note that FRGI has a P/CF ratio of 7.65. 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 stock's P/CF looks attractive against its industry's average P/CF of 17.37. Over the past 52 weeks, FRGI's P/CF has been as high as 10.32 and as low as 6.11, with a median of 8.
These are only a few of the key metrics included in Fiesta Restaurant Group's strong Value grade, but they help show that the stock is likely undervalued right now. When factoring in the strength of its earnings outlook, FRGI looks like an impressive value stock at the moment.