While the proven Zacks Rank places an emphasis on earnings estimates and estimate revisions to find strong stocks, we also know that investors tend to develop their own individual strategies. With this in mind, we are always looking at value, growth, and momentum trends to discover great companies.
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.
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.
Accel Entertainment (ACEL) is a stock many investors are watching right now. ACEL is currently holding a Zacks Rank #2 (Buy) and a Value grade of A. The stock holds a P/E ratio of 14.22, while its industry has an average P/E of 23.41. Over the last 12 months, ACEL's Forward P/E has been as high as 17.76 and as low as 11.88, with a median of 14.32.
Investors should also recognize that ACEL has a P/B ratio of 3.59. 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. ACEL's current P/B looks attractive when compared to its industry's average P/B of 8.20. Over the past 12 months, ACEL's P/B has been as high as 4.92 and as low as 3.14, with a median of 3.81.
Value investors also frequently use the P/S ratio. This metric is found by dividing a stock's price with the company's revenue. Some people prefer this metric because sales are harder to manipulate on an income statement. This means it could be a truer performance indicator. ACEL has a P/S ratio of 0.71. This compares to its industry's average P/S of 1.29.
Finally, we should also recognize that ACEL has a P/CF ratio of 8.80. 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. ACEL's current P/CF looks attractive when compared to its industry's average P/CF of 23.74. Over the past year, ACEL's P/CF has been as high as 11.23 and as low as 7.35, with a median of 8.96.
These figures are just a handful of the metrics value investors tend to look at, but they help show that Accel Entertainment is likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, ACEL feels like a great value stock at the moment.
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Accel Entertainment, Inc. (ACEL): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).