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 use tried-and-true metrics and fundamental analysis to find companies that they believe are undervalued at their current share price levels.
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 Sprague Resources (SRLP). SRLP is currently sporting a Zacks Rank of #1 (Strong Buy), as well as a Value grade of A. The stock is trading with a P/E ratio of 10.47, which compares to its industry's average of 19.45. Over the last 12 months, SRLP's Forward P/E has been as high as 47.37 and as low as 7.63, with a median of 10.96.
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 popular metric because sales are harder to manipulate on an income statement, so they are often considered a better performance indicator. SRLP has a P/S ratio of 0.11. This compares to its industry's average P/S of 0.28.
Finally, investors will want to recognize that SRLP has a P/CF ratio of 4.30. 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. This stock's P/CF looks attractive against its industry's average P/CF of 9.68. SRLP's P/CF has been as high as 5.73 and as low as 3.40, with a median of 4.28, all within the past year.
These are only a few of the key metrics included in Sprague Resources'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, SRLP looks like an impressive value stock at the moment.
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