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Here at Zacks, we focus on our proven ranking system, which places an emphasis on earnings estimates and estimate revisions, to find winning stocks. But we also understand that investors develop their own strategies, so we are constantly looking at the latest trends in value, growth, and momentum to find strong companies for our readers.
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 rely on traditional forms of analysis on key valuation metrics to find stocks that they believe are undervalued, leaving room for profits.
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 stock to keep an eye on is Delta Air Lines (DAL). DAL is currently holding a Zacks Rank of #2 (Buy) and a Value grade of A. The stock has a Forward P/E ratio of 9.02. This compares to its industry's average Forward P/E of 17.24. Over the past 52 weeks, DAL's Forward P/E has been as high as 9.94 and as low as 5.44, with a median of 7.01.
We also note that DAL holds a PEG ratio of 0.81. 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. DAL's industry currently sports an average PEG of 0.92. Within the past year, DAL's PEG has been as high as 1.15 and as low as 0.62, with a median of 0.76.
Investors should also recognize that DAL has a P/B ratio of 2.89. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. This stock's P/B looks solid versus its industry's average P/B of 5.31. Within the past 52 weeks, DAL's P/B has been as high as 3.11 and as low as 1.94, with a median of 2.64.
Value investors will likely look at more than just these metrics, but the above data helps show that Delta Air Lines is likely undervalued currently. And when considering the strength of its earnings outlook, DAL sticks out at as one of the market's strongest value stocks.
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