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 rely on traditional forms of analysis on key valuation metrics to find stocks that they believe are undervalued, leaving room for profits.
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 Compania Cervecerias Unidas (CCU). CCU is currently sporting a Zacks Rank #2 (Buy), as well as a Value grade of A. The stock is trading with P/E ratio of 13.96 right now. For comparison, its industry sports an average P/E of 15.68. Over the past year, CCU's Forward P/E has been as high as 21.80 and as low as 12.44, with a median of 14.43.
We also note that CCU holds a PEG ratio of 1.18. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. CCU's industry currently sports an average PEG of 2.03. Over the past 52 weeks, CCU's PEG has been as high as 3.22 and as low as 0.99, with a median of 1.46.
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. CCU has a P/S ratio of 0.69. This compares to its industry's average P/S of 0.94.
These are just a handful of the figures considered in Compania Cervecerias Unidas'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 CCU is an impressive value stock right now.
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Compania Cervecerias Unidas, S.A. (CCU): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).