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.
Of these, value investing is easily one of the most popular ways to find great stocks in any market environment. Value investors use a variety of methods, including tried-and-true valuation metrics, to find these stocks.
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.
Shell (SHEL) is a stock many investors are watching right now. SHEL is currently holding a Zacks Rank #1 (Strong Buy) and a Value grade of A. The stock holds a P/E ratio of 10.75, while its industry has an average P/E of 12.75. SHEL's Forward P/E has been as high as 11.60 and as low as 7.39, with a median of 9.11, all within the past year.
We should also highlight that SHEL has a P/B ratio of 1.14. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. This stock's P/B looks attractive against its industry's average P/B of 2.16. SHEL's P/B has been as high as 1.24 and as low as 0.99, with a median of 1.12, over the past year.
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. SHEL has a P/S ratio of 0.95. This compares to its industry's average P/S of 1.
Finally, investors should note that SHEL has a P/CF ratio of 5.43. 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 stock's P/CF looks attractive against its industry's average P/CF of 9.14. Over the past year, SHEL's P/CF has been as high as 5.67 and as low as 4.14, with a median of 4.86.
These are just a handful of the figures considered in Shell's great Value grade. Still, they help show that the stock is likely being undervalued at the moment. Add this to the strength of its earnings outlook, and we can clearly see that SHEL is an impressive value stock right now.
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This article originally published on Zacks Investment Research (zacks.com).