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.
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 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.
One company to watch right now is Internet Initiative Japan (IIJIY - Free Report) . IIJIY is currently sporting a Zacks Rank of #1 (Strong Buy) and an A for Value. The stock holds a P/E ratio of 28.19, while its industry has an average P/E of 29.90. IIJIY's Forward P/E has been as high as 30.55 and as low as 18.40, with a median of 21.18, all within the past year.
Investors should also note that IIJIY holds a PEG ratio of 1.60. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. IIJIY's industry has an average PEG of 1.65 right now.
Another valuation metric that we should highlight is IIJIY's P/B ratio of 2.32. The P/B ratio is used to compare a stock's market value with its book value, which is defined as total assets minus total liabilities. This stock's P/B looks attractive against its industry's average P/B of 5.35. Over the past 12 months, IIJIY's P/B has been as high as 2.32 and as low as 1.17, with a median of 1.45.
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. IIJIY has a P/S ratio of 0.88. This compares to its industry's average P/S of 2.08.
Finally, our model also underscores that IIJIY has a P/CF ratio of 7.69. 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. IIJIY's P/CF compares to its industry's average P/CF of 24.33. Within the past 12 months, IIJIY's P/CF has been as high as 7.69 and as low as 4.34, with a median of 5.45.
Value investors will likely look at more than just these metrics, but the above data helps show that Internet Initiative Japan is likely undervalued currently. And when considering the strength of its earnings outlook, IIJIY sticks out at as one of the market's strongest value stocks.