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.
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 Herc Holdings (HRI). HRI is currently sporting a Zacks Rank of #2 (Buy) and an A for Value. The stock has a Forward P/E ratio of 11.23. This compares to its industry's average Forward P/E of 13.52. Over the past year, HRI's Forward P/E has been as high as 18.64 and as low as 9.08, with a median of 11.71.
Investors will also notice that HRI has a PEG ratio of 0.53. 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 industry has an average PEG of 1.23 right now. HRI's PEG has been as high as 0.56 and as low as 0.26, with a median of 0.39, 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. This is a popular metric because sales are harder to manipulate on an income statement, so they are often considered a better performance indicator. HRI has a P/S ratio of 0.72. This compares to its industry's average P/S of 1.15.
Finally, our model also underscores that HRI has a P/CF ratio of 2.82. 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. HRI's P/CF compares to its industry's average P/CF of 7.60. HRI's P/CF has been as high as 2.85 and as low as 1.03, with a median of 2.27, all within the past year.
These figures are just a handful of the metrics value investors tend to look at, but they help show that Herc Holdings is likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, HRI feels like a great value stock at the moment.
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