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.
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.
One company value investors might notice is Arrow Electronics (ARW). ARW is currently sporting a Zacks Rank #2 (Buy), as well as a Value grade of A. The stock has a Forward P/E ratio of 9.44. This compares to its industry's average Forward P/E of 16.55. Over the past year, ARW's Forward P/E has been as high as 11.05 and as low as 8.04, with a median of 9.71.
ARW is also sporting a PEG ratio of 0.46. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. ARW's PEG compares to its industry's average PEG of 0.83. Over the past 52 weeks, ARW's PEG has been as high as 0.55 and as low as 0.40, with a median of 0.49.
We should also highlight that ARW has a P/B ratio of 0.98. 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. ARW's current P/B looks attractive when compared to its industry's average P/B of 2.34. ARW's P/B has been as high as 1.22 and as low as 0.78, with a median of 1.02, 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. This is a popular metric because sales are harder to manipulate on an income statement, so they are often considered a better performance indicator. ARW has a P/S ratio of 0.3. This compares to its industry's average P/S of 0.51.
Finally, we should also recognize that ARW has a P/CF ratio of 9.63. 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 company's current P/CF looks solid when compared to its industry's average P/CF of 20.20. Over the past 52 weeks, ARW's P/CF has been as high as 11.55 and as low as 8.13, with a median of 10.03.
These figures are just a handful of the metrics value investors tend to look at, but they help show that Arrow Electronics is likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, ARW feels like a great value stock at the moment.
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Arrow Electronics, Inc. (ARW): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).