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 use fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.
On top of the Zacks Rank, investors can also look at our innovative Style Scores system to find stocks with specific traits. For example, value investors will want to focus on the "Value" category. Stocks with high Zacks Ranks and "A" grades for Value will be some of the highest-quality value stocks on the market today.
One stock to keep an eye on is Thor Industries (THO). THO is currently holding a Zacks Rank #2 (Buy) and a Value grade of A.
We should also highlight that THO has a P/B ratio of 1.29. 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. THO's current P/B looks attractive when compared to its industry's average P/B of 1.51. Over the past year, THO's P/B has been as high as 1.51 and as low as 0.87, with a median of 1.27.
Value investors also love the P/S ratio, which is calculated by simply dividing a stock's price with the company's sales. This is a preferred metric because revenue can't really be manipulated, so sales are often a truer performance indicator. THO has a P/S ratio of 0.38. This compares to its industry's average P/S of 1.12.
Finally, our model also underscores that THO has a P/CF ratio of 10.88. This metric takes into account a company's operating cash flow and can be used to find stocks that are undervalued based on their solid cash outlook. This stock's P/CF looks attractive against its industry's average P/CF of 12.56. THO's P/CF has been as high as 12.12 and as low as 7.08, with a median of 10.10, all within the past year.
These are only a few of the key metrics included in Thor Industries'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, THO looks like an impressive value stock at the moment.
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Thor Industries, Inc. (THO): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).