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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, perhaps no stock market trend is more popular than value investing, which is a strategy that has proven to be successful in all sorts of market environments. Value investors rely on traditional forms of analysis on key valuation metrics to find stocks that they believe are undervalued, leaving room for profits.
On top of the Zacks Rank, investors can also look at our innovative Style Scores system to find stocks with specific traits. For example, value investors will want to focus on the "Value" category. Stocks with high Zacks Ranks and "A" grades for Value will be some of the highest-quality value stocks on the market today.
One stock to keep an eye on is Andritz (ADRZY). ADRZY is currently sporting a Zacks Rank of #2 (Buy) and an A for Value. The stock has a Forward P/E ratio of 9.09. This compares to its industry's average Forward P/E of 20.87. Over the past year, ADRZY's Forward P/E has been as high as 11.94 and as low as 7.77, with a median of 9.89.
Value investors also use the P/S ratio. The P/S ratio is is calculated as price divided by sales. This is a prefered metric because revenue can't really be manipulated, so sales are often a truer performance indicator. ADRZY has a P/S ratio of 0.72. This compares to its industry's average P/S of 1.05.
Value investors will likely look at more than just these metrics, but the above data helps show that Andritz is likely undervalued currently. And when considering the strength of its earnings outlook, ADRZY sticks out at as one of the market's strongest value stocks.
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Andritz (ADRZY) : Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).