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.
In addition to the Zacks Rank, investors looking for stocks with specific traits can utilize our Style Scores system. Of course, value investors will be most interested in the system's "Value" category. Stocks with "A" grades for Value and high Zacks Ranks are among the best value stocks available at any given moment.
One stock to keep an eye on is PG&E (PCG). PCG is currently sporting a Zacks Rank #2 (Buy) and an A for Value. The stock has a Forward P/E ratio of 9.36. This compares to its industry's average Forward P/E of 15.54. Over the past 52 weeks, PCG's Forward P/E has been as high as 14.79 and as low as 8.28, with a median of 10.97.
PCG is also sporting a PEG ratio of 1.05. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. PCG's industry has an average PEG of 1.48 right now. Over the last 12 months, PCG's PEG has been as high as 1.54 and as low as 0.88, with a median of 1.13.
Investors should also recognize that PCG has a P/B ratio of 1.34. The P/B ratio is used to compare a stock's market value with 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 2.73. PCG's P/B has been as high as 2.09 and as low as 1.16, with a median of 1.54, 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. PCG has a P/S ratio of 1.77. This compares to its industry's average P/S of 2.62.
Finally, investors should note that PCG has a P/CF ratio of 4.89. This data point considers a firm's operating cash flow and is frequently used to find companies that are undervalued when considering their solid cash outlook. This company's current P/CF looks solid when compared to its industry's average P/CF of 12.45. Over the past 52 weeks, PCG's P/CF has been as high as 6.87 and as low as 4.26, with a median of 5.49.
These are only a few of the key metrics included in PG&E'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, PCG looks like an impressive value stock at the moment.
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This article originally published on Zacks Investment Research (zacks.com).