The proven Zacks Rank system focuses on earnings estimates and estimate revisions to find winning stocks. Nevertheless, we know that our readers all have their own perspectives, so we are always looking at the latest trends in value, growth, and momentum to find strong picks.
Considering these trends, value investing is clearly one of the most preferred ways to find strong stocks in any type of market. Value investors use a variety of methods, including tried-and-true valuation metrics, to find these stocks.
On top of the Zacks Rank, investors can also look at our innovative Style Scores system to find stocks with specific traits. For example, value investors will want to focus on the "Value" category. Stocks with high Zacks Ranks and "A" grades for Value will be some of the highest-quality value stocks on the market today.
Sprouts Farmers (SFM - Free Report) is a stock many investors are watching right now. SFM is currently holding a Zacks Rank of #1 (Strong Buy) and a Value grade of A. The stock holds a P/E ratio of 17.67, while its industry has an average P/E of 20.67. Over the last 12 months, SFM's Forward P/E has been as high as 18.03 and as low as 10.28, with a median of 15.70.
Finally, investors will want to recognize that SFM has a P/CF ratio of 8.09. 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. SFM's P/CF compares to its industry's average P/CF of 9.96. Over the past year, SFM's P/CF has been as high as 9.83 and as low as 4.44, with a median of 7.13.
These figures are just a handful of the metrics value investors tend to look at, but they help show that Sprouts Farmers is likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, SFM feels like a great value stock at the moment.