Should Value Investors Buy Encore Capital Group (ECPG) Stock?
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.
Considering these trends, value investing is clearly one of the most preferred ways to find strong stocks in any type of market. Value investors rely on traditional forms of analysis on key valuation metrics to find stocks that they believe are undervalued, leaving room for profits.
On top of the Zacks Rank, investors can also look at our innovative Style Scores system to find stocks with specific traits. For example, value investors will want to focus on the "Value" category. Stocks with high Zacks Ranks and "A" grades for Value will be some of the highest-quality value stocks on the market today.
Encore Capital Group (ECPG) is a stock many investors are watching right now. ECPG is currently sporting a Zacks Rank of #2 (Buy) and an A for Value. The stock is trading with P/E ratio of 4.04 right now. For comparison, its industry sports an average P/E of 8.20. ECPG's Forward P/E has been as high as 6.56 and as low as 2.47, with a median of 5.57, all within the past year.
Value investors also use the P/S ratio. The P/S ratio is is calculated as price divided by 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. ECPG has a P/S ratio of 0.8. This compares to its industry's average P/S of 0.85.
These are only a few of the key metrics included in Encore Capital Group'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, ECPG looks like an impressive value stock at the moment.
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Encore Capital Group Inc (ECPG) : Free Stock Analysis Report
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