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 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 stock to keep an eye on is H&R Block (HRB). HRB is currently sporting a Zacks Rank of #1 (Strong Buy), as well as an A grade for Value. The stock is trading with a P/E ratio of 9.30, which compares to its industry's average of 14.80. Over the past year, HRB's Forward P/E has been as high as 14.59 and as low as 9.28, with a median of 12.35.
Investors should also note that HRB holds a PEG ratio of 0.93. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. HRB's PEG compares to its industry's average PEG of 1.26. Over the last 12 months, HRB's PEG has been as high as 1.46 and as low as 0.93, with a median of 1.24.
Finally, investors will want to recognize that HRB has a P/CF ratio of 8. This metric takes into account a company's operating cash flow and can be used to find stocks that are undervalued based on their solid cash outlook. HRB's P/CF compares to its industry's average P/CF of 9.19. HRB's P/CF has been as high as 10.15 and as low as 5.62, with a median of 8.23, all within the past year.
These figures are just a handful of the metrics value investors tend to look at, but they help show that H&R Block is likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, HRB feels like a great value stock at the moment.
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