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 rely on traditional forms of analysis on key valuation metrics to find stocks that they believe are undervalued, leaving room for profits.
Luckily, Zacks has developed its own Style Scores system in an effort to find stocks with specific traits. Value investors will be interested in the system's "Value" category. Stocks with both "A" grades in the Value category and high Zacks Ranks are among the strongest value stocks on the market right now.
One company to watch right now is Scientific Games (SGMS). SGMS is currently sporting a Zacks Rank of #1 (Strong Buy), as well as a Value grade of A.
Value investors also love the P/S ratio, which is calculated by simply dividing a stock's price with the company's sales. This is a prefered metric because revenue can't really be manipulated, so sales are often a truer performance indicator. SGMS has a P/S ratio of 0.67. This compares to its industry's average P/S of 1.55.
Finally, investors will want to recognize that SGMS has a P/CF ratio of 3.41. 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. This stock's P/CF looks attractive against its industry's average P/CF of 13.30. Over the past 52 weeks, SGMS's P/CF has been as high as 8.25 and as low as 2.26, with a median of 3.62.
These figures are just a handful of the metrics value investors tend to look at, but they help show that Scientific Games is likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, SGMS feels like a great value stock at the moment.