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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.
Of these, value investing is easily one of the most popular ways to find great stocks in any market environment. Value investors rely on traditional forms of analysis on key valuation metrics to find stocks that they believe are undervalued, leaving room for profits.
In addition to the Zacks Rank, investors looking for stocks with specific traits can utilize our Style Scores system. Of course, value investors will be most interested in the system's "Value" category. Stocks with "A" grades for Value and high Zacks Ranks are among the best value stocks available at any given moment.
One stock to keep an eye on is Blue Bird (BLBD). BLBD is currently sporting a Zacks Rank of #2 (Buy) and an A for Value.
Investors will also notice that BLBD has a PEG ratio of 0.72. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. BLBD's industry currently sports an average PEG of 2.08. Within the past year, BLBD's PEG has been as high as 1.05 and as low as 0.17, with a median of 0.40.
Finally, we should also recognize that BLBD has a P/CF ratio of 9.07. 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. BLBD's P/CF compares to its industry's average P/CF of 16.94. BLBD's P/CF has been as high as 19.68 and as low as 8.79, with a median of 12.34, all within the past year.
Value investors will likely look at more than just these metrics, but the above data helps show that Blue Bird is likely undervalued currently. And when considering the strength of its earnings outlook, BLBD sticks out at as one of the market's strongest value stocks.
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This article originally published on Zacks Investment Research (zacks.com).