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.
Of these, value investing is easily one of the most popular ways to find great stocks in any market environment. Value investors rely on traditional forms of analysis on key valuation metrics to find stocks that they believe are undervalued, leaving room for profits.
Zacks has developed the innovative Style Scores system to highlight stocks with specific traits. For example, value investors will be interested in stocks with great grades in the "Value" category. When paired with a high Zacks Rank, "A" grades in the Value category are among the strongest value stocks on the market today.
One company value investors might notice is Abercrombie & Fitch (ANF). ANF is currently sporting a Zacks Rank of #1 (Strong Buy) and an A for Value.
Investors should also note that ANF holds a PEG ratio of 1.25. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. ANF's PEG compares to its industry's average PEG of 1.33. Over the past 52 weeks, ANF's PEG has been as high as 3.84 and as low as 1.16, with a median of 1.71.
Investors should also recognize that ANF has a P/B ratio of 1.44. 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 company's current P/B looks solid when compared to its industry's average P/B of 3.55. ANF's P/B has been as high as 1.73 and as low as 0.93, with a median of 1.28, over the past year.
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. ANF has a P/S ratio of 0.48. This compares to its industry's average P/S of 0.57.
Finally, investors will want to recognize that ANF has a P/CF ratio of 7.64. 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. ANF's P/CF compares to its industry's average P/CF of 8.07. Over the past 52 weeks, ANF's P/CF has been as high as 11.23 and as low as 5.04, with a median of 7.09.
These are just a handful of the figures considered in Abercrombie & Fitch's great Value grade. Still, they help show that the stock is likely being undervalued at the moment. Add this to the strength of its earnings outlook, and we can clearly see that ANF is an impressive value stock right now.
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