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, perhaps no stock market trend is more popular than value investing, which is a strategy that has proven to be successful in all sorts of market environments. 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.
One company value investors might notice is Eni (E). E is currently sporting a Zacks Rank #1 (Strong Buy), as well as an A grade for Value. The stock holds a P/E ratio of 10.33, while its industry has an average P/E of 10.45. Over the past 52 weeks, E's Forward P/E has been as high as 10.97 and as low as 6.79, with a median of 8.05.
Another notable valuation metric for E is its P/B ratio of 0.97. The P/B is a method of comparing a stock's market value to 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 1.95. Over the past year, E's P/B has been as high as 1.00 and as low as 0.70, with a median of 0.85.
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. E has a P/S ratio of 1.01. This compares to its industry's average P/S of 1.03.
Finally, our model also underscores that E has a P/CF ratio of 4.96. This metric takes into account a company's operating cash flow and can be used to find stocks that are undervalued based on their solid cash outlook. E's P/CF compares to its industry's average P/CF of 8.82. E's P/CF has been as high as 5.13 and as low as 3.64, with a median of 4.30, all within the past year.
Value investors will likely look at more than just these metrics, but the above data helps show that Eni is likely undervalued currently. And when considering the strength of its earnings outlook, E sticks out as one of the market's strongest value stocks.
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This article originally published on Zacks Investment Research (zacks.com).