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 use fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.
Zacks has developed the innovative Style Scores system to highlight stocks with specific traits. For example, value investors will be interested in stocks with great grades in the "Value" category. When paired with a high Zacks Rank, "A" grades in the Value category are among the strongest value stocks on the market today.
One company value investors might notice is Nomad Foods Limited (NOMD). NOMD is currently sporting a Zacks Rank #2 (Buy), as well as an A grade for Value. The stock holds a P/E ratio of 6.17, while its industry has an average P/E of 13.90. Over the last 12 months, NOMD's Forward P/E has been as high as 10.54 and as low as 6.16, with a median of 8.39.
Another valuation metric that we should highlight is NOMD's P/B ratio of 0.7. 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 solid versus its industry's average P/B of 1.63. NOMD's P/B has been as high as 1.16 and as low as 0.70, with a median of 0.97, over the past year.
Value investors also frequently use the P/S ratio. This metric is found by dividing a stock's price with the company's revenue. This is a preferred metric because revenue can't really be manipulated, so sales are often a truer performance indicator. NOMD has a P/S ratio of 0.43. This compares to its industry's average P/S of 0.67.
Finally, we should also recognize that NOMD has a P/CF ratio of 6.01. This figure highlights a company's operating cash flow and can be used to find firms that are undervalued when considering their impressive cash outlook. This stock's P/CF looks attractive against its industry's average P/CF of 10.34. Over the past 52 weeks, NOMD's P/CF has been as high as 9.96 and as low as 6.01, with a median of 8.21.
These are only a few of the key metrics included in Nomad Foods Limited'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, NOMD looks like an impressive value stock at the moment.
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Nomad Foods Limited (NOMD): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).