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.
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 rely on traditional forms of analysis on key valuation metrics to find stocks that they believe are undervalued, leaving room for profits.
In addition to the Zacks Rank, investors looking for stocks with specific traits can utilize our Style Scores system. Of course, value investors will be most interested in the system's "Value" category. Stocks with "A" grades for Value and high Zacks Ranks are among the best value stocks available at any given moment.
One company to watch right now is Macy's (M). M 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 9.15, while its industry has an average P/E of 13.24. Over the last 12 months, M's Forward P/E has been as high as 9.61 and as low as 4.69, with a median of 6.13.
Another notable valuation metric for M is its P/B ratio of 1.06. 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 attractive against its industry's average P/B of 2.03. M's P/B has been as high as 1.21 and as low as 0.61, with a median of 0.86, over the past year.
Finally, investors will want to recognize that M has a P/CF ratio of 3.47. 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. M's current P/CF looks attractive when compared to its industry's average P/CF of 6.90. Over the past year, M's P/CF has been as high as 5.04 and as low as 1.92, with a median of 2.70.
Value investors will likely look at more than just these metrics, but the above data helps show that Macy's is likely undervalued currently. And when considering the strength of its earnings outlook, M sticks out as one of the market's strongest value stocks.
Beyond Nvidia: AI's Second Wave Is Here
The AI revolution has already minted millionaires. But the stocks everyone knows about aren't likely to keep delivering the biggest profits. AI’s second wave is moving from infrastructure to implementation and these companies are at the forefront of this transition, positioned to become what Amazon and Google were to the internet era.
See Stocks Now >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Macy's, Inc. (M): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).