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.
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.
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.
One company to watch right now is Embotelladora Andina (AKO.B). AKO.B is currently holding a Zacks Rank of #1 (Strong Buy) and a Value grade of A. The stock has a Forward P/E ratio of 10.30. This compares to its industry's average Forward P/E of 21.11. AKO.B's Forward P/E has been as high as 10.74 and as low as 7.84, with a median of 9.70, all within the past year.
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. AKO.B has a P/S ratio of 0.8. This compares to its industry's average P/S of 2.13.
Finally, our model also underscores that AKO.B has a P/CF ratio of 16.17. 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. This company's current P/CF looks solid when compared to its industry's average P/CF of 25.88. AKO.B's P/CF has been as high as 18.40 and as low as 7.24, with a median of 10.20, all within the past year.
Value investors will likely look at more than just these metrics, but the above data helps show that Embotelladora Andina is likely undervalued currently. And when considering the strength of its earnings outlook, AKO.B sticks out at as one of the market's strongest value stocks.
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