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 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 AeroCentury (ACY). ACY 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 7.59 right now. For comparison, its industry sports an average P/E of 7.64. Over the past year, ACY's Forward P/E has been as high as 12.29 and as low as -3.27, with a median of 8.86.
We should also highlight that ACY has a P/B ratio of 0.37. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. ACY's current P/B looks attractive when compared to its industry's average P/B of 0.80. ACY's P/B has been as high as 0.52 and as low as 0.28, with a median of 0.46, over the past year.
Finally, we should also recognize that ACY has a P/CF ratio of 1.05. 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. ACY's current P/CF looks attractive when compared to its industry's average P/CF of 2.65. ACY's P/CF has been as high as 1.56 and as low as 0.89, with a median of 1.18, 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 AeroCentury is likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, ACY feels like a great value stock at the moment.
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