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.
Of these, value investing is easily one of the most popular ways to find great stocks in any market environment. Value investors use fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.
Zacks has developed the innovative Style Scores system to highlight stocks with specific traits. For example, value investors will be interested in stocks with great grades in the "Value" category. When paired with a high Zacks Rank, "A" grades in the Value category are among the strongest value stocks on the market today.
One company to watch right now is Tyson Foods (TSN). TSN is currently sporting a Zacks Rank of #2 (Buy) and an A for Value. The stock is trading with a P/E ratio of 12.57, which compares to its industry's average of 15.51. Over the last 12 months, TSN's Forward P/E has been as high as 13.09 and as low as 8.38, with a median of 10.15.
TSN is also sporting a PEG ratio of 1.45. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. TSN's PEG compares to its industry's average PEG of 2.07. Over the last 12 months, TSN's PEG has been as high as 1.45 and as low as 0.76, with a median of 0.92.
We should also highlight that TSN has a P/B ratio of 2.18. The P/B ratio is used to compare a stock's market value with its book value, which is defined as total assets minus total liabilities. TSN's current P/B looks attractive when compared to its industry's average P/B of 2.88. Over the past 12 months, TSN's P/B has been as high as 2.22 and as low as 1.45, with a median of 1.78.
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. TSN has a P/S ratio of 0.72. This compares to its industry's average P/S of 0.73.
Finally, investors should note that TSN has a P/CF ratio of 9.66. This data point considers a firm's operating cash flow and is frequently used to find companies that are undervalued when considering their solid cash outlook. This company's current P/CF looks solid when compared to its industry's average P/CF of 13.77. Over the past 52 weeks, TSN's P/CF has been as high as 9.87 and as low as 4.70, with a median of 6.72.
These are only a few of the key metrics included in Tyson Foods'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, TSN looks like an impressive value stock at the moment.
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