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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.
Considering these trends, value investing is clearly one of the most preferred ways to find strong stocks in any type of 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 National Steel (SID). SID is currently sporting a Zacks Rank of #2 (Buy), as well as a Value grade of A. The stock is trading with P/E ratio of 5.86 right now. For comparison, its industry sports an average P/E of 10.55. Over the last 12 months, SID's Forward P/E has been as high as 20.46 and as low as 5.32, with a median of 9.73.
We should also highlight that SID has a P/B ratio of 0.77. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. This company's current P/B looks solid when compared to its industry's average P/B of 1.49. Over the past 12 months, SID's P/B has been as high as 1.33 and as low as 0.63, with a median of 0.96.
Value investors also frequently use the P/S ratio. This metric is found by dividing a stock's price with the company's revenue. Some people prefer this metric because sales are harder to manipulate on an income statement. This means it could be a truer performance indicator. SID has a P/S ratio of 0.24. This compares to its industry's average P/S of 0.33.
Finally, investors should note that SID has a P/CF ratio of 4.49. 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 14.88. SID's P/CF has been as high as 6.93 and as low as 3.52, with a median of 5.51, all within the past year.
These figures are just a handful of the metrics value investors tend to look at, but they help show that National Steel is likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, SID feels like a great value stock at the moment.