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.
Considering these trends, value investing is clearly one of the most preferred ways to find strong stocks in any type of market. Value investors use a variety of methods, including tried-and-true valuation metrics, to find these stocks.
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 to watch right now is Herc Holdings (HRI). HRI is currently holding a Zacks Rank of #2 (Buy) and a Value grade of A.
We also note that HRI holds a PEG ratio of 0.38. 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. HRI's industry currently sports an average PEG of 1. HRI's PEG has been as high as 0.43 and as low as 0.37, with a median of 0.41, 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. HRI has a P/S ratio of 0.62. This compares to its industry's average P/S of 1.05.
Finally, we should also recognize that HRI has a P/CF ratio of 2.26. This metric focuses on a firm's operating cash flow and is often used to find stocks that are undervalued based on the strength of their cash outlook. HRI's current P/CF looks attractive when compared to its industry's average P/CF of 6.16. HRI's P/CF has been as high as 2.59 and as low as 1.03, with a median of 2.18, 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 Herc Holdings is likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, HRI feels like a great value stock at the moment.
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