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.
Considering these trends, value investing is clearly one of the most preferred ways to find strong stocks in any type of 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.
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.
RISE Education (REDU - Free Report) is a stock many investors are watching right now. REDU is currently sporting a Zacks Rank of #2 (Buy), as well as an A grade for Value.
Another notable valuation metric for REDU is its P/B ratio of 2.45. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. REDU's current P/B looks attractive when compared to its industry's average P/B of 6.71. REDU's P/B has been as high as 7.59 and as low as 1.94, with a median of 5.18, over the past year.
Value investors also love the P/S ratio, which is calculated by simply dividing a stock's price with the company's 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. REDU has a P/S ratio of 1.06. This compares to its industry's average P/S of 1.1.
Finally, we should also recognize that REDU has a P/CF ratio of 17.50. This data point considers a firm's operating cash flow and is frequently used to find companies that are undervalued when considering their solid cash outlook. REDU's P/CF compares to its industry's average P/CF of 35.72. Over the past year, REDU's P/CF has been as high as 20.58 and as low as 5.43, with a median of 16.03.
Value investors will likely look at more than just these metrics, but the above data helps show that RISE Education is likely undervalued currently. And when considering the strength of its earnings outlook, REDU sticks out at as one of the market's strongest value stocks.