Here at Zacks, our focus is on the proven Zacks Rank system, which emphasizes earnings estimates and estimate revisions to find great stocks. Nevertheless, we are always paying attention to the latest value, growth, and momentum trends to underscore strong picks.
Looking at the history of these trends, perhaps none is more beloved than value investing. This strategy simply looks to identify companies that are being undervalued by the broader market. 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.
ABB (ABB - Free Report) is a stock many investors are watching right now. ABB is currently holding a Zacks Rank of #2 (Buy) and a Value grade of A.
Investors should also recognize that ABB has a P/B ratio of 2.89. The P/B is a method of comparing a stock's market value to 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 5.13. ABB's P/B has been as high as 3.85 and as low as 2.27, with a median of 3.03, over the past year.
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. ABB has a P/S ratio of 1.52. This compares to its industry's average P/S of 1.59.
Finally, investors will want to recognize that ABB has a P/CF ratio of 16.59. This metric takes into account a company's operating cash flow and can be used to find stocks that are undervalued based on their solid cash outlook. ABB's P/CF compares to its industry's average P/CF of 22.81. ABB's P/CF has been as high as 22.40 and as low as 12.94, with a median of 16.88, all within the past year.
These are just a handful of the figures considered in ABB's great Value grade. Still, they help show that the stock is likely being undervalued at the moment. Add this to the strength of its earnings outlook, and we can clearly see that ABB is an impressive value stock right now.