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Zacks.com highlights: Accuray, Berkshire Hills Bancorp, A. Schulman, Sysco and Tailored Brands

Steel Dynamics (STLD) reported earnings 30 days ago. What's next for the stock? We take a look at earnings estimates for some clues.

For Immediate Release

Chicago, IL – Feb 1, 2018 - Stocks in this week’s article include: Accuray ARAY, Berkshire Hills Bancorp BHLB, A. Schulman SHLM, Sysco SYY and Tailored Brands TLRD.

Screen of the Week of Zacks Investment Research:

Why the P/S Ratio Is My Favorite Valuation Metric

This week, I'm going to focus on the Price to Sales ratio for finding great stocks at great values.

The Price to Sales ratio is a great valuation metric. And given the recent run-up in stocks, value, to me, is becoming more and more important.

In fact, aside from the Zacks Rank, if I could only use one item to screen and pick stocks with, this item would be the one.

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Definition

Let's first start with a definition.

The Price to Sales ratio is simply: Price divided by Sales

If the Price to Sales ratio is 1 that means you're paying $1 for every $1 of sales the company makes.

A price to sales ratio of 2 means you're paying $2 for every $1 of sales the company makes.

As you might have guessed, the lower the Price the Sales ratio, the better.

A price to Sales ratio of .5 means you're paying 50 cents for every $1 of sales the company makes.

And paying less than a dollar for a dollar's worth of something is a good bargain.

One of the reasons I like the Price to Sales ratio is because it looks at sales rather than earnings, like the P/E ratio does.

And sales are harder to manipulate on an income statement than earnings.

Secondly, I'd be hard pressed to find a screen where adding the Price to Sales ratio didn't improve it.

Price to Sales Study

For me, I prefer to look for stocks with a Price to Sales ratio under 1. Although, I'm willing to go up to 4, depending on the industry.

But in my testing, as the illustration below shows, those with a Price to Sales ratio of 1 or less produced the best returns. Between 1 and 2 also outperformed pretty significantly. But once you got over 4, the odds were against you.

·         P/S range greater than or equal to 0 and less than or equal to 1:Average Annual Return: 17.8%

·         P/S range greater than 1 and less than or equal to 2: Average Annual Return: 11.1%

·         P/S range greater than 2 and less than or equal to 3: Average Annual Return: 7.3%

·         P/S range greater than 3 and less than or equal to 4: Average Annual Return: 3.8%

·         P/S range greater than 4: Average Annual Return: -7.9%

But the best way to use it, I've found, is to find stocks with a Price to Sales ratio below the median for its Industry.

And that's what we'll be focusing on in this week's screen.

And that's what we're screening for today…

For the rest of this Screen of the Week article please visit Zacks.com at: https://www.zacks.com/commentary/147584/why-the-ps-ratio-is-my-favorite-valuation-metric

Get the remaining stocks on the list and start putting this and other ideas to the test. It can all be done with the Research Wizard stock picking and back testing software.

The Research Wizard is a great place to begin. It's easy to use. Everything is in plain language. And it's very intuitive. Start your Research Wizard trial today. And the next time you read an economic report, open up the Research Wizard, plug your finds in, and see what gems come out.

Click here to sign up for a free trial to the Research Wizard today.

Disclosure: Officers, directors and/or employees of Zacks Investment Research may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this material. An affiliated investment advisory firm may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this material.

About Screen of the Week

Zacks.com created the first and best screening system on the web earning the distinction as the "#1 site for screening stocks" by Money Magazine.  But powerful screening tools is just the start. That is why Zacks created the Screen of the Week to highlight profitable stock picking strategies that investors can actively use.

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Contact: Jim Giaquinto

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Zacks.com provides investment resources and informs you of these resources, which you may choose to use in making your own investment decisions. Zacks is providing information on this resource to you subject to the Zacks "Terms and Conditions of Service" disclaimer. www.zacks.com/disclaimer.

Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.


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
 
A. Schulman, Inc. (SHLM) : Free Stock Analysis Report
 
Berkshire Hills Bancorp, Inc. (BHLB) : Free Stock Analysis Report
 
Sysco Corporation (SYY) : Free Stock Analysis Report
 
Accuray Incorporated (ARAY) : Free Stock Analysis Report
 
Tailored Brands, Inc. (TLRD) : Free Stock Analysis Report
 
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