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.
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 company to watch right now is At Home Group (HOME - Free Report) . HOME is currently holding a Zacks Rank of #1 (Strong Buy) and a Value grade of A. The stock has a Forward P/E ratio of 6.50. This compares to its industry's average Forward P/E of 17.42. HOME's Forward P/E has been as high as 22.03 and as low as 4.99, with a median of 10.70, all within the past year.
HOME is also sporting a PEG ratio of 0.43. 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. HOME's PEG compares to its industry's average PEG of 0.99. Over the past 52 weeks, HOME's PEG has been as high as 1.20 and as low as 0.33, with a median of 0.65.
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. HOME has a P/S ratio of 0.17. This compares to its industry's average P/S of 0.43.
These are only a few of the key metrics included in At Home 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, HOME looks like an impressive value stock at the moment.