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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.
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 Ultrapar Participacoes (UGP). UGP is currently sporting a Zacks Rank of #2 (Buy), as well as an A grade for Value. The stock has a Forward P/E ratio of 11.20. This compares to its industry's average Forward P/E of 19.06. Over the past year, UGP's Forward P/E has been as high as 20.19 and as low as 6.92, with a median of 11.30.
UGP is also sporting a PEG ratio of 2.82. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. UGP's PEG compares to its industry's average PEG of 3.24. Over the last 12 months, UGP's PEG has been as high as 4.03 and as low as 1.13, with a median of 2.68.
Investors should also recognize that UGP has a P/B ratio of 1.21. 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 attractive against its industry's average P/B of 2.38. Over the past 12 months, UGP's P/B has been as high as 2.27 and as low as 0.97, with a median of 1.53.
Finally, investors will want to recognize that UGP has a P/CF ratio of 4.60. This metric takes into account a company's operating cash flow and can be used to find stocks that are undervalued based on their solid cash outlook. This stock's P/CF looks attractive against its industry's average P/CF of 11.99. Over the past year, UGP's P/CF has been as high as 7.45 and as low as 3.46, with a median of 5.08.
These figures are just a handful of the metrics value investors tend to look at, but they help show that Ultrapar Participacoes is likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, UGP feels like a great value stock at the moment.