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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 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 to watch right now is Griffon (GFF). GFF is currently sporting a Zacks Rank of #2 (Buy), as well as a Value grade of A. The stock is trading with a P/E ratio of 14.91, which compares to its industry's average of 28.37. GFF's Forward P/E has been as high as 24.03 and as low as 8.92, with a median of 14.29, all within 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. GFF has a P/S ratio of 0.62. This compares to its industry's average P/S of 1.51.
Finally, investors will want to recognize that GFF has a P/CF ratio of 10.52. 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 company's current P/CF looks solid when compared to its industry's average P/CF of 30.84. GFF's P/CF has been as high as 10.84 and as low as 5.43, with a median of 8.32, all within the past year.
Value investors will likely look at more than just these metrics, but the above data helps show that Griffon is likely undervalued currently. And when considering the strength of its earnings outlook, GFF sticks out at as one of the market's strongest value stocks.
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Griffon Corporation (GFF) : Free Stock Analysis Report
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