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 use a variety of methods, including tried-and-true valuation metrics, to find these stocks.
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.
One company to watch right now is China Distance (DL). DL is currently sporting a Zacks Rank of #2 (Buy), as well as an A grade for Value. The stock holds a P/E ratio of 9, while its industry has an average P/E of 21.64. Over the past 52 weeks, DL's Forward P/E has been as high as 12.36 and as low as 6.51, with a median of 8.36.
We also note that DL holds a PEG ratio of 0.60. 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. DL's PEG compares to its industry's average PEG of 1.04. DL's PEG has been as high as 0.82 and as low as 0.43, with a median of 0.56, all within the past year.
Value investors also love the P/S ratio, which is calculated by simply dividing a stock's price with the company's sales. This is a prefered metric because revenue can't really be manipulated, so sales are often a truer performance indicator. DL has a P/S ratio of 1.26. This compares to its industry's average P/S of 1.39.
Value investors will likely look at more than just these metrics, but the above data helps show that China Distance is likely undervalued currently. And when considering the strength of its earnings outlook, DL sticks out at as one of the market's strongest value stocks.
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China Distance Education Holdings Limited (DL) : Free Stock Analysis Report
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