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 value investors might notice is Computer Programs and Systems (CPSI). CPSI is currently sporting a Zacks Rank of #2 (Buy), as well as an A grade for Value. The stock has a Forward P/E ratio of 11.92. This compares to its industry's average Forward P/E of 33.04. CPSI's Forward P/E has been as high as 16.52 and as low as 10.87, with a median of 13.98, all within the past year.
Investors will also notice that CPSI has a PEG ratio of 1.15. 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. CPSI's PEG compares to its industry's average PEG of 2.38. Within the past year, CPSI's PEG has been as high as 1.55 and as low as 1.05, with a median of 1.31.
Another notable valuation metric for CPSI is its P/B ratio of 2.46. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. This stock's P/B looks solid versus its industry's average P/B of 2.73. Over the past year, CPSI's P/B has been as high as 3.35 and as low as 2.26, with a median of 2.94.
Value investors also love the P/S ratio, which is calculated by simply dividing a stock's price with the company's sales. Some people prefer this metric because sales are harder to manipulate on an income statement. This means it could be a truer performance indicator. CPSI has a P/S ratio of 1.31. This compares to its industry's average P/S of 2.4.
These are just a handful of the figures considered in Computer Programs and Systems's great Value grade. Still, they help show that the stock is likely being undervalued at the moment. Add this to the strength of its earnings outlook, and we can clearly see that CPSI is an impressive value stock right now.
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