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.
Of these, value investing is easily one of the most popular ways to find great stocks in any market environment. 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 company value investors might notice is Sunoco (SUN). SUN is currently sporting a Zacks Rank #2 (Buy) and an A for Value. The stock holds a P/E ratio of 7.87, while its industry has an average P/E of 13.97. Over the past 52 weeks, SUN's Forward P/E has been as high as 8.64 and as low as 4.63, with a median of 7.26.
Value investors also use the P/S ratio. The P/S ratio is calculated as price divided by sales. Some people prefer this metric because sales are harder to manipulate on an income statement. This means it could be a truer performance indicator. SUN has a P/S ratio of 0.4. This compares to its industry's average P/S of 0.7.
Finally, investors should note that SUN has a P/CF ratio of 6.61. 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 company's current P/CF looks solid when compared to its industry's average P/CF of 10.83. SUN's P/CF has been as high as 8.56 and as low as 5.14, with a median of 6.38, all within the past year.
These figures are just a handful of the metrics value investors tend to look at, but they help show that Sunoco is likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, SUN feels like a great value stock at the moment.
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Sunoco LP (SUN): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).