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.
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 fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.
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 to watch right now is Carter Bankshares (CARE). CARE is currently sporting a Zacks Rank #2 (Buy) and an A for Value.
We should also highlight that CARE has a P/B ratio of 1.13. 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 company's current P/B looks solid when compared to its industry's average P/B of 1.22. CARE's P/B has been as high as 1.21 and as low as 0.80, with a median of 1.04, over the past year.
Value investors also use the P/S ratio. The P/S ratio is calculated as price divided by 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. CARE has a P/S ratio of 1.89. This compares to its industry's average P/S of 2.02.
Finally, investors will want to recognize that CARE has a P/CF ratio of 10.62. 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. CARE's P/CF compares to its industry's average P/CF of 11.79. Over the past year, CARE's P/CF has been as high as 17.16 and as low as 8.21, with a median of 10.66.
Value investors will likely look at more than just these metrics, but the above data helps show that Carter Bankshares is likely undervalued currently. And when considering the strength of its earnings outlook, CARE sticks out as one of the market's strongest value stocks.
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Carter Bankshares, Inc. (CARE): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).