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.
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 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 stock to keep an eye on is Orix Corp Ads (IX). IX is currently sporting a Zacks Rank #2 (Buy), as well as a Value grade of A.
Another notable valuation metric for IX is its P/B ratio of 1.06. 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. This stock's P/B looks solid versus its industry's average P/B of 2.98. Over the past 12 months, IX's P/B has been as high as 1.11 and as low as 0.76, with a median of 0.89.
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. IX has a P/S ratio of 2. This compares to its industry's average P/S of 2.21.
These are just a handful of the figures considered in Orix Corp Ads's great Value grade. Still, they help show that the stock is likely being undervalued at the moment. Add this to the strength of its earnings outlook, and we can clearly see that IX is an impressive value stock right now.
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Orix Corp Ads (IX): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).