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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.
Of these, perhaps no stock market trend is more popular than value investing, which is a strategy that has proven to be successful in all sorts of market environments. Value investors use tried-and-true metrics and fundamental analysis to find companies that they believe are undervalued at their current share price levels.
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 stock to keep an eye on is Wartsila (WRTBY). WRTBY is currently holding a Zacks Rank of #2 (Buy) and a Value grade of A. The stock is trading with P/E ratio of 21.41 right now. For comparison, its industry sports an average P/E of 39.71. Over the last 12 months, WRTBY's Forward P/E has been as high as 31.24 and as low as 20.01, with a median of 25.01.
Investors should also recognize that WRTBY has a P/B ratio of 4.18. 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 attractive against its industry's average P/B of 8.68. Over the past year, WRTBY's P/B has been as high as 5.70 and as low as 3.70, with a median of 4.73.
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. WRTBY has a P/S ratio of 1.56. This compares to its industry's average P/S of 1.57.
These are just a handful of the figures considered in Wartsila's great Value grade. Still, they help show that the stock is likely being undervalued at the moment. Add this to the strength of its earnings outlook, and we can clearly see that WRTBY is an impressive value stock right now.
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This article originally published on Zacks Investment Research (zacks.com).