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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.
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 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 Ethan Allen Interiors Inc. (ETD). ETD is currently sporting a Zacks Rank of #1 (Strong Buy), as well as an A grade for Value. The stock is trading with P/E ratio of 7.35 right now. For comparison, its industry sports an average P/E of 13.57. Over the past 52 weeks, ETD's Forward P/E has been as high as 18.05 and as low as 7.35, with a median of 11.88.
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 popular metric because sales are harder to manipulate on an income statement, so they are often considered a better performance indicator. ETD has a P/S ratio of 0.83. This compares to its industry's average P/S of 1.16.
Finally, investors will want to recognize that ETD has a P/CF ratio of 6.55. 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 20.90. Over the past year, ETD's P/CF has been as high as 24.16 and as low as 6.55, with a median of 15.41.
Another great Retail - Home Furnishings stock you could consider is Tempur Sealy International (TPX), which is a # 2 (Buy) stock with a Value Score of A.
Shares of Tempur Sealy International are currently trading at a forward earnings multiple of 11.45 and a PEG ratio of 0.35 compared to its industry's P/E and PEG ratios of 13.57 and 0.54, respectively.
TPX's Forward P/E has been as high as 16.25 and as low as 11.20, with a median of 13.45. During the same time period, its PEG ratio has been as high as 0.88, as low as 0.34, with a median of 0.61.
Tempur Sealy International sports a P/B ratio of 22.98 as well; this compares to its industry's price-to-book ratio of 8.14. In the past 52 weeks, TPX's P/B has been as high as 25.76, as low as 10.80, with a median of 22.23.
These are just a handful of the figures considered in Ethan Allen Interiors Inc. and Tempur Sealy International's great Value grade. Still, they help show that the stock is likely being undervalued at the moment. Add this to the strength of its earnings outlook, and we can clearly see that ETD and TPX is an impressive value stock right now.
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Ethan Allen Interiors Inc. (ETD) : Free Stock Analysis Report
Tempur Sealy International, Inc. (TPX) : Free Stock Analysis Report
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