Here at Zacks, our focus is on the proven Zacks Rank system, which emphasizes earnings estimates and estimate revisions to find great stocks. Nevertheless, we are always paying attention to the latest value, growth, and momentum trends to underscore strong picks.
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 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 AZZ (AZZ). AZZ is currently sporting a Zacks Rank of #2 (Buy) and an A for Value. The stock is trading with a P/E ratio of 15.95, which compares to its industry's average of 16.21. AZZ's Forward P/E has been as high as 24.16 and as low as 13.70, with a median of 17.53, all within the past year.
We should also highlight that AZZ has a P/B ratio of 1.91. 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 stock's P/B looks attractive against its industry's average P/B of 4.07. AZZ's P/B has been as high as 2.51 and as low as 1.65, with a median of 2.01, 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. AZZ has a P/S ratio of 1.22. This compares to its industry's average P/S of 1.58.
Finally, investors should note that AZZ has a P/CF ratio of 11.29. 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. This company's current P/CF looks solid when compared to its industry's average P/CF of 18.74. Over the past 52 weeks, AZZ's P/CF has been as high as 14.37 and as low as 8.41, with a median of 11.47.
These figures are just a handful of the metrics value investors tend to look at, but they help show that AZZ is likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, AZZ feels like a great value stock at the moment.
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