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 fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.
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 is trading with a P/E ratio of 15.48, which compares to its industry's average of 20.40. SFM's Forward P/E has been as high as 17.93 and as low as 10.28, with a median of 15.60, all within the past year.
Finally, our model also underscores that SFM has a P/CF ratio of 7.27. 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. This company's current P/CF looks solid when compared to its industry's average P/CF of 9.96. Over the past 52 weeks, SFM's P/CF has been as high as 9.18 and as low as 4.44, with a median of 7.09.
These are only a few of the key metrics included in Sprouts Farmers'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, SFM looks like an impressive value stock at the moment.