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.
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 to watch right now is GMS Inc. (GMS). GMS is currently holding a Zacks Rank of #1 (Strong Buy) and a Value grade of A. The stock is trading with P/E ratio of 7.82 right now. For comparison, its industry sports an average P/E of 19.15. Over the past year, GMS's Forward P/E has been as high as 17.69 and as low as 7.54, with a median of 14.07.
Investors should also note that GMS holds a PEG ratio of 1.12. 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. GMS's industry has an average PEG of 1.22 right now. Over the past 52 weeks, GMS's PEG has been as high as 2.53 and as low as 1.08, with a median of 1.88.
Finally, investors should note that GMS has a P/CF ratio of 8.47. 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 16.07. Within the past 12 months, GMS's P/CF has been as high as 12.85 and as low as 8.13, with a median of 10.03.
Value investors will likely look at more than just these metrics, but the above data helps show that GMS Inc. Is likely undervalued currently. And when considering the strength of its earnings outlook, GMS sticks out at as one of the market's strongest value stocks.
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