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.
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 use a variety of methods, including tried-and-true valuation metrics, to find these stocks.
Luckily, Zacks has developed its own Style Scores system in an effort to find stocks with specific traits. Value investors will be interested in the system's "Value" category. Stocks with both "A" grades in the Value category and high Zacks Ranks are among the strongest value stocks on the market right now.
Ryder System (R) is a stock many investors are watching right now. R is currently sporting a Zacks Rank #2 (Buy) and an A for Value.
We should also highlight that R has a P/B ratio of 2.44. 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. R's current P/B looks attractive when compared to its industry's average P/B of 2.47. Over the past year, R's P/B has been as high as 2.52 and as low as 1.79, with a median of 2.16.
Value investors also use the P/S ratio. The P/S ratio is calculated as price divided by sales. This is a preferred metric because revenue can't really be manipulated, so sales are often a truer performance indicator. R has a P/S ratio of 0.69. This compares to its industry's average P/S of 1.23.
Finally, investors will want to recognize that R has a P/CF ratio of 3.25. This figure highlights a company's operating cash flow and can be used to find firms that are undervalued when considering their impressive cash outlook. This stock's P/CF looks attractive against its industry's average P/CF of 6.16. R's P/CF has been as high as 3.35 and as low as 2.37, with a median of 2.93, all within the past year.
Value investors will likely look at more than just these metrics, but the above data helps show that Ryder System is likely undervalued currently. And when considering the strength of its earnings outlook, R sticks out as one of the market's strongest value stocks.
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Ryder System, Inc. (R): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).