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 use a variety of methods, including tried-and-true valuation metrics, to find these stocks.
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 value investors might notice is Greif (GEF). GEF is currently holding a Zacks Rank of #2 (Buy) and a Value grade of A. The stock is trading with a P/E ratio of 11.26, which compares to its industry's average of 12.17. Over the past year, GEF's Forward P/E has been as high as 12.12 and as low as 8.14, with a median of 10.27.
Value investors also love the P/S ratio, which is calculated by simply dividing a stock's price with the company's 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. GEF has a P/S ratio of 0.47. This compares to its industry's average P/S of 0.81.
These figures are just a handful of the metrics value investors tend to look at, but they help show that Greif is likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, GEF feels like a great value stock at the moment.
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