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.
Looking at the history of these trends, perhaps none is more beloved than value investing. This strategy simply looks to identify companies that are being undervalued by the broader 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.
Luckily, Zacks has developed its own Style Scores system in an effort to find stocks with specific traits. Value investors will be interested in the system's "Value" category. Stocks with both "A" grades in the Value category and high Zacks Ranks are among the strongest value stocks on the market right now.
One stock to keep an eye on is Aaron's (AAN). AAN is currently sporting a Zacks Rank of #2 (Buy), as well as an A grade for Value.
AAN is also sporting a PEG ratio of 0.94. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. AAN's PEG compares to its industry's average PEG of 1.04. Within the past year, AAN's PEG has been as high as 1.04 and as low as 0.75, with a median of 0.94.
We should also highlight that AAN has a P/B ratio of 2.27. 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 3.53. AAN's P/B has been as high as 2.44 and as low as 1.54, with a median of 2.03, over the past year.
Finally, we should also recognize that AAN has a P/CF ratio of 1.98. 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. This stock's P/CF looks attractive against its industry's average P/CF of 6.26. Over the past year, AAN's P/CF has been as high as 2.13 and as low as 1.34, with a median of 1.78.
These figures are just a handful of the metrics value investors tend to look at, but they help show that Aaron's is likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, AAN feels like a great value stock at the moment.
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