Here at Zacks, we focus on our proven ranking system, which places an emphasis on earnings estimates and estimate revisions, to find winning stocks. But we also understand that investors develop their own strategies, so we are constantly looking at the latest trends in value, growth, and momentum to find strong companies for our readers.
Of these, value investing is easily one of the most popular ways to find great stocks in any market environment. Value investors use a variety of methods, including tried-and-true valuation metrics, to find these stocks.
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 company value investors might notice is PattersonUTI Energy (PTEN). PTEN is currently sporting a Zacks Rank #2 (Buy), as well as a Value grade of A.
Another notable valuation metric for PTEN is its P/B ratio of 0.62. 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 company's current P/B looks solid when compared to its industry's average P/B of 1.84. PTEN's P/B has been as high as 1.06 and as low as 0.61, with a median of 0.80, over the past year.
Value investors also love the P/S ratio, which is calculated by simply dividing a stock's price with the company's 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. PTEN has a P/S ratio of 0.97. This compares to its industry's average P/S of 1.9.
These are only a few of the key metrics included in PattersonUTI Energy's strong Value grade, but they help show that the stock is likely undervalued right now. When factoring in the strength of its earnings outlook, PTEN looks like an impressive value stock at the moment.
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Patterson-UTI Energy, Inc. (PTEN): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).