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.
In addition to the Zacks Rank, investors looking for stocks with specific traits can utilize our Style Scores system. Of course, value investors will be most interested in the system's "Value" category. Stocks with "A" grades for Value and high Zacks Ranks are among the best value stocks available at any given moment.
One company value investors might notice is Armour Residential REIT (ARR). ARR is currently holding a Zacks Rank of #1 (Strong Buy) and a Value grade of A. The stock has a Forward P/E ratio of 8.67. This compares to its industry's average Forward P/E of 8.80. ARR's Forward P/E has been as high as 10.90 and as low as 8.45, with a median of 9.50, all within the past year.
Another valuation metric that we should highlight is ARR's P/B ratio of 0.77. 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. This stock's P/B looks attractive against its industry's average P/B of 1.11. ARR's P/B has been as high as 0.84 and as low as 0.68, with a median of 0.78, 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. ARR has a P/S ratio of 2.63. This compares to its industry's average P/S of 3.58.
Finally, investors should note that ARR has a P/CF ratio of 4.24. This figure highlights a company's operating cash flow and can be used to find firms that are undervalued when considering their impressive cash outlook. This stock's P/CF looks attractive against its industry's average P/CF of 4.38. Over the past 52 weeks, ARR's P/CF has been as high as 4.72 and as low as 3.80, with a median of 4.34.
Value investors will likely look at more than just these metrics, but the above data helps show that Armour Residential REIT is likely undervalued currently. And when considering the strength of its earnings outlook, ARR sticks out at as one of the market's strongest value stocks.
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ARMOUR Residential REIT, Inc. (ARR) : Free Stock Analysis Report
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