The proven Zacks Rank system focuses on earnings estimates and estimate revisions to find winning stocks. Nevertheless, we know that our readers all have their own perspectives, so we are always looking at the latest trends in value, growth, and momentum to find 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.
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 Arrow Electronics (ARW). ARW is currently holding a Zacks Rank #1 (Strong Buy) and a Value grade of A. The stock is trading with P/E ratio of 9.44 right now. For comparison, its industry sports an average P/E of 12.22. Over the past 52 weeks, ARW's Forward P/E has been as high as 11.05 and as low as 8.04, with a median of 9.71.
ARW is also sporting a PEG ratio of 0.46. 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. ARW's PEG compares to its industry's average PEG of 0.47. Over the last 12 months, ARW's PEG has been as high as 0.55 and as low as 0.40, with a median of 0.49.
We should also highlight that ARW has a P/B ratio of 0.98. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. ARW's current P/B looks attractive when compared to its industry's average P/B of 2.02. Within the past 52 weeks, ARW's P/B has been as high as 1.22 and as low as 0.78, with a median of 1.02.
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. ARW has a P/S ratio of 0.29. This compares to its industry's average P/S of 0.49.
Finally, our model also underscores that ARW has a P/CF ratio of 9.63. 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 company's current P/CF looks solid when compared to its industry's average P/CF of 15.95. Over the past 52 weeks, ARW's P/CF has been as high as 11.55 and as low as 8.13, with a median of 10.03.
Value investors will likely look at more than just these metrics, but the above data helps show that Arrow Electronics is likely undervalued currently. And when considering the strength of its earnings outlook, ARW sticks out as one of the market's strongest value stocks.
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Arrow Electronics, Inc. (ARW): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).