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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 fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.
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.
One company value investors might notice is Methode (MEI). MEI is currently sporting a Zacks Rank of #2 (Buy) and an A for Value. The stock is trading with a P/E ratio of 11.14, which compares to its industry's average of 25.44. Over the last 12 months, MEI's Forward P/E has been as high as 12.15 and as low as 6.64, with a median of 8.36.
Value investors also frequently use the P/S ratio. This metric is found by dividing a stock's price with the company's revenue. Some people prefer this metric because sales are harder to manipulate on an income statement. This means it could be a truer performance indicator. MEI has a P/S ratio of 1.41. This compares to its industry's average P/S of 1.71.
Finally, investors will want to recognize that MEI has a P/CF ratio of 9.62. This metric takes into account a company's operating cash flow and can be used to find stocks that are undervalued based on their solid cash outlook. This stock's P/CF looks attractive against its industry's average P/CF of 20.19. MEI's P/CF has been as high as 11.61 and as low as 6.71, with a median of 8.01, all within the past year.
These are just a handful of the figures considered in Methode'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 MEI is an impressive value stock right now.
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Methode Electronics, Inc. (MEI) : Free Stock Analysis Report
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