While the proven Zacks Rank places an emphasis on earnings estimates and estimate revisions to find strong stocks, we also know that investors tend to develop their own individual strategies. With this in mind, we are always looking at value, growth, and momentum trends to discover great companies.
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 tried-and-true metrics and fundamental analysis to find companies that they believe are undervalued at their current share price levels.
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 stock to keep an eye on is Pearson (PSO - Free Report) . PSO is currently sporting a Zacks Rank of #2 (Buy) and an A for Value. The stock is trading with a P/E ratio of 11.98, which compares to its industry's average of 25.63. Over the past year, PSO's Forward P/E has been as high as 15.72 and as low as 9.50, with a median of 12.95.
Investors should also recognize that PSO has a P/B ratio of 0.77. 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 1.57. Within the past 52 weeks, PSO's P/B has been as high as 1.62 and as low as 0.74, with a median of 1.22.
These are only a few of the key metrics included in Pearson's strong Value grade, but they help show that the stock is likely undervalued right now. When factoring in the strength of its earnings outlook, PSO looks like an impressive value stock at the moment.