The proven Zacks Rank system focuses on earnings estimates and estimate revisions to find winning stocks. Nevertheless, we know that our readers all have their own perspectives, so we are always looking at the latest trends in value, growth, and momentum to find strong picks.
Of these, value investing is easily one of the most popular ways to find great stocks in any market environment. Value investors use a variety of methods, including tried-and-true valuation metrics, to find these stocks.
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 to watch right now is VALE S.A. (VALE). VALE is currently sporting a Zacks Rank of #2 (Buy), as well as an A grade for Value. The stock holds a P/E ratio of 6.35, while its industry has an average P/E of 6.37. Over the past year, VALE's Forward P/E has been as high as 10.56 and as low as 6.07, with a median of 8.47.
Another notable valuation metric for VALE is its P/B ratio of 1.55. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. VALE's current P/B looks attractive when compared to its industry's average P/B of 1.56. Over the past 12 months, VALE's P/B has been as high as 2 and as low as 1.30, with a median of 1.60.
Value investors also frequently use the P/S ratio. This metric is found by dividing a stock's price with the company's revenue. This is a prefered metric because revenue can't really be manipulated, so sales are often a truer performance indicator. VALE has a P/S ratio of 1.86. This compares to its industry's average P/S of 5.23.
Finally, investors should note that VALE has a P/CF ratio of 6.77. 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 stock's P/CF looks attractive against its industry's average P/CF of 6.80. Over the past 52 weeks, VALE's P/CF has been as high as 11.22 and as low as 5.67, with a median of 7.93.
These figures are just a handful of the metrics value investors tend to look at, but they help show that VALE S.A. Is likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, VALE feels like a great value stock at the moment.
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