Here at Zacks, we focus on our proven ranking system, which places an emphasis on earnings estimates and estimate revisions, to find winning stocks. But we also understand that investors develop their own strategies, so we are constantly looking at the latest trends in value, growth, and momentum to find strong companies for our readers.
Of these, perhaps no stock market trend is more popular than value investing, which is a strategy that has proven to be successful in all sorts of market environments. Value investors use fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.
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 company value investors might notice is DXP Enterprises (DXPE). DXPE is currently sporting a Zacks Rank of #2 (Buy), as well as a Value grade of A. The stock is trading with P/E ratio of 13.32 right now. For comparison, its industry sports an average P/E of 22.02. Over the last 12 months, DXPE's Forward P/E has been as high as 19.99 and as low as 11.35, with a median of 14.35.
Investors should also note that DXPE holds a PEG ratio of 0.84. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. DXPE's industry has an average PEG of 2.07 right now. Within the past year, DXPE's PEG has been as high as 1 and as low as 0.65, with a median of 0.77.
Value investors also love the P/S ratio, which is calculated by simply dividing a stock's price with the company's sales. Some people prefer this metric because sales are harder to manipulate on an income statement. This means it could be a truer performance indicator. DXPE has a P/S ratio of 0.5. This compares to its industry's average P/S of 1.41.
Finally, we should also recognize that DXPE has a P/CF ratio of 9.34. 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. DXPE's current P/CF looks attractive when compared to its industry's average P/CF of 16.84. Over the past year, DXPE's P/CF has been as high as 12.59 and as low as 8.10, with a median of 9.90.
These are just a handful of the figures considered in DXP Enterprises'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 DXPE is an impressive value stock right now.
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