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, 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.
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 value investors might notice is Fortuna Silver Mines (FSM). FSM is currently sporting a Zacks Rank of #2 (Buy), as well as an A grade for Value.
Investors should also recognize that FSM has a P/B ratio of 0.57. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. This company's current P/B looks solid when compared to its industry's average P/B of 1.62. Over the past 12 months, FSM's P/B has been as high as 1.13 and as low as 0.45, with a median of 0.84.
Value investors also use the P/S ratio. The P/S ratio is is calculated as price divided by sales. This is a prefered metric because revenue can't really be manipulated, so sales are often a truer performance indicator. FSM has a P/S ratio of 1.41. This compares to its industry's average P/S of 1.54.
These figures are just a handful of the metrics value investors tend to look at, but they help show that Fortuna Silver Mines is likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, FSM feels like a great value stock at the moment.