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The proven Zacks Rank system focuses on earnings estimates and estimate revisions to find winning stocks. Nevertheless, we know that our readers all have their own perspectives, so we are always looking at the latest trends in value, growth, and momentum to find strong picks.
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.
On top of the Zacks Rank, investors can also look at our innovative Style Scores system to find stocks with specific traits. For example, value investors will want to focus on the "Value" category. Stocks with high Zacks Ranks and "A" grades for Value will be some of the highest-quality value stocks on the market today.
One stock to keep an eye on is Wartsila (WRTBY). WRTBY 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 23.36. This compares to its industry's average Forward P/E of 31.75. Over the past year, WRTBY's Forward P/E has been as high as 31.24 and as low as 20.01, with a median of 24.54.
Another notable valuation metric for WRTBY is its P/B ratio of 4.58. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. WRTBY's current P/B looks attractive when compared to its industry's average P/B of 7.47. Within the past 52 weeks, WRTBY's P/B has been as high as 5.70 and as low as 3.70, with a median of 4.61.
Value investors also love the P/S ratio, which is calculated by simply dividing a stock's price with the company's sales. This is a prefered metric because revenue can't really be manipulated, so sales are often a truer performance indicator. WRTBY has a P/S ratio of 1.65. This compares to its industry's average P/S of 1.66.
Finally, we should also recognize that WRTBY has a P/CF ratio of 18.35. This metric focuses on a firm's operating cash flow and is often used to find stocks that are undervalued based on the strength of their cash outlook. This stock's P/CF looks attractive against its industry's average P/CF of 57.33. Over the past year, WRTBY's P/CF has been as high as 25.78 and as low as 14.84, with a median of 20.02.
These figures are just a handful of the metrics value investors tend to look at, but they help show that Wartsila is likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, WRTBY feels like a great value stock at the moment.