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.
Considering these trends, value investing is clearly one of the most preferred ways to find strong stocks in any type of market. Value investors use tried-and-true metrics and fundamental analysis to find companies that they believe are undervalued at their current share price levels.
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.
Leggett & Platt (LEG) is a stock many investors are watching right now. LEG is currently sporting a Zacks Rank #2 (Buy), as well as a Value grade of A.
Value investors also frequently use the P/S ratio. This metric is found by dividing a stock's price with the company's revenue. This is a preferred metric because revenue can't really be manipulated, so sales are often a truer performance indicator. LEG has a P/S ratio of 0.39. This compares to its industry's average P/S of 0.4.
Finally, investors should note that LEG has a P/CF ratio of 4.78. 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. LEG's P/CF compares to its industry's average P/CF of 7.42. Over the past year, LEG's P/CF has been as high as 61.65 and as low as 3.05, with a median of 4.80.
Value investors will likely look at more than just these metrics, but the above data helps show that Leggett & Platt is likely undervalued currently. And when considering the strength of its earnings outlook, LEG sticks out as one of the market's strongest value stocks.
5 Stocks Set to Double
Each was handpicked by a Zacks expert as the #1 favorite stock to gain +100% or more in the coming year. While not all picks can be winners, previous recommendations have soared +112%, +171%, +209% and +232%.
Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.
Today, See These 5 Potential Home Runs >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Leggett & Platt, Incorporated (LEG): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).