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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.
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 tried-and-true metrics and fundamental analysis to find companies that they believe are undervalued at their current share price levels.
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 Herc Holdings (HRI). HRI is currently sporting a Zacks Rank of #1 (Strong Buy) and an A for Value.
Investors should also note that HRI holds a PEG ratio of 0.71. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. HRI's PEG compares to its industry's average PEG of 0.95. Over the past 52 weeks, HRI's PEG has been as high as 25.28 and as low as 0.15, with a median of 8.65.
Value investors also frequently use the P/S ratio. This metric is found by dividing a stock's price with the company's revenue. 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 1.45. This compares to its industry's average P/S of 1.81.
Finally, investors should note that HRI has a P/CF ratio of 4.89. This data point considers a firm's operating cash flow and is frequently used to find companies that are undervalued when considering their solid cash outlook. HRI's current P/CF looks attractive when compared to its industry's average P/CF of 4.93. Over the past year, HRI's P/CF has been as high as 4.89 and as low as 0.71, with a median of 2.27.
Value investors will likely look at more than just these metrics, but the above data helps show that Herc Holdings is likely undervalued currently. And when considering the strength of its earnings outlook, HRI sticks out at as one of the market's strongest value stocks.