Here at Zacks, we focus on our proven ranking system, which places an emphasis on earnings estimates and estimate revisions, to find winning stocks. But we also understand that investors develop their own strategies, so we are constantly looking at the latest trends in value, growth, and momentum to find strong companies for our readers.
Of these, perhaps no stock market trend is more popular than value investing, which is a strategy that has proven to be successful in all sorts of market environments. Value investors rely on traditional forms of analysis on key valuation metrics to find stocks that they believe are undervalued, leaving room for profits.
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 company to watch right now is CECO Environmental (CECE - Free Report) . CECE is currently holding a Zacks Rank of #2 (Buy) and a Value grade of A.
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. CECE has a P/S ratio of 0.45. This compares to its industry's average P/S of 0.79.
Finally, investors should note that CECE has a P/CF ratio of 4.57. 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. CECE's current P/CF looks attractive when compared to its industry's average P/CF of 16.36. Within the past 12 months, CECE's P/CF has been as high as 188.97 and as low as 4.57, with a median of 30.72.
Value investors will likely look at more than just these metrics, but the above data helps show that CECO Environmental is likely undervalued currently. And when considering the strength of its earnings outlook, CECE sticks out at as one of the market's strongest value stocks.