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.
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 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 China Automotive Systems (CAAS). CAAS is currently sporting a Zacks Rank of #2 (Buy) and an A for Value. The stock has a Forward P/E ratio of 10.39. This compares to its industry's average Forward P/E of 22.89. Over the last 12 months, CAAS's Forward P/E has been as high as 22.96 and as low as 5.31, with a median of 10.07.
Value investors also frequently use the P/S ratio. This metric is found by dividing a stock's price with the company's revenue. Some people prefer this metric because sales are harder to manipulate on an income statement. This means it could be a truer performance indicator. CAAS has a P/S ratio of 0.26. This compares to its industry's average P/S of 0.4.
Finally, investors will want to recognize that CAAS has a P/CF ratio of 3.24. 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. CAAS's P/CF compares to its industry's average P/CF of 8.82. CAAS's P/CF has been as high as 5.78 and as low as 1.74, with a median of 3.01, all within the past year.
These are only a few of the key metrics included in China Automotive Systems's strong Value grade, but they help show that the stock is likely undervalued right now. When factoring in the strength of its earnings outlook, CAAS looks like an impressive value stock at the moment.
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China Automotive Systems, Inc. (CAAS) : Free Stock Analysis Report
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