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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.
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.
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 to watch right now is Atlanticus (ATLC). ATLC 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 7.97, which compares to its industry's average of 14.40. Over the past year, ATLC's Forward P/E has been as high as 12.46 and as low as 4.40, with a median of 6.56.
Investors should also recognize that ATLC has a P/B ratio of 1.54. 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 2.56. Over the past year, ATLC's P/B has been as high as 2.08 and as low as 0.84, with a median of 1.20.
Value investors also use the P/S ratio. The P/S ratio is is calculated as price divided by sales. Some people prefer this metric because sales are harder to manipulate on an income statement. This means it could be a truer performance indicator. ATLC has a P/S ratio of 0.61. This compares to its industry's average P/S of 1.73.
Finally, we should also recognize that ATLC has a P/CF ratio of 5.91. 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. ATLC's current P/CF looks attractive when compared to its industry's average P/CF of 14.24. ATLC's P/CF has been as high as 9.86 and as low as 3.71, with a median of 5.43, all within the past year.
Value investors will likely look at more than just these metrics, but the above data helps show that Atlanticus is likely undervalued currently. And when considering the strength of its earnings outlook, ATLC sticks out at as one of the market's strongest value stocks.