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Here at Zacks, our focus is on the proven Zacks Rank system, which emphasizes earnings estimates and estimate revisions to find great stocks. Nevertheless, we are always paying attention to the latest value, growth, and momentum trends to underscore strong picks.
Considering these trends, value investing is clearly one of the most preferred ways to find strong stocks in any type of market. Value investors use fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.
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 PlayAGS (AGS). AGS is currently sporting a Zacks Rank of #1 (Strong Buy) and an A for Value. The stock is trading with a P/E ratio of 16.65, which compares to its industry's average of 28.19. Over the past year, AGS's Forward P/E has been as high as 65.50 and as low as 15.09, with a median of 16.95.
Another notable valuation metric for AGS is its P/B ratio of 4.38. The P/B is a method of comparing a stock's market value to 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 9.42. AGS's P/B has been as high as 6.65 and as low as 4.19, with a median of 6.41, over the past year.
Value investors also frequently use the P/S ratio. This metric is found by dividing a stock's price with the company's revenue. This is a prefered metric because revenue can't really be manipulated, so sales are often a truer performance indicator. AGS has a P/S ratio of 1.26. This compares to its industry's average P/S of 1.29.
Value investors will likely look at more than just these metrics, but the above data helps show that PlayAGS is likely undervalued currently. And when considering the strength of its earnings outlook, AGS sticks out at as one of the market's strongest value stocks.
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PlayAGS, Inc. (AGS) : Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).