While the proven Zacks Rank places an emphasis on earnings estimates and estimate revisions to find strong stocks, we also know that investors tend to develop their own individual strategies. With this in mind, we are always looking at value, growth, and momentum trends to discover great companies.
Considering these trends, value investing is clearly one of the most preferred ways to find strong stocks in any type of market. Value investors rely on traditional forms of analysis on key valuation metrics to find stocks that they believe are undervalued, leaving room for profits.
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.
Steelcase (SCS) is a stock many investors are watching right now. SCS is currently sporting a Zacks Rank of #1 (Strong Buy), as well as an A grade for Value.
Another valuation metric that we should highlight is SCS’s P/B ratio of 2.54. The P/B ratio pits a stock’s market value against its book value, which is defined as total assets minus total liabilities. This stock’s P/B looks solid versus its industry’s average P/B of 3.27. SCS’s P/B has been as high as 2.64 and as low as 1.93, with a median of 2.30, over 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 prefered metric because revenue can’t really be manipulated, so sales are often a truer performance indicator. SCS has a P/S ratio of 0.59. This compares to its industry’s average P/S of 0.8.
Finally, our model also underscores that SCS has a P/CF ratio of 9.95. This figure highlights a company’s operating cash flow and can be used to find firms that are undervalued when considering their impressive cash outlook. SCS’s current P/CF looks attractive when compared to its industry’s average P/CF of 11.85. Within the past 12 months, SCS’s P/CF has been as high as 13.42 and as low as 8.29, with a median of 9.88.
These are only a few of the key metrics included in Steelcase’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, SCS looks like an impressive value stock at the moment.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Be the first to comment