Here at Zacks, our focus is on the proven Zacks Rank system, which emphasizes earnings estimates and estimate revisions to find great stocks. Nevertheless, we are always paying attention to the latest value, growth, and momentum trends to underscore strong picks.
Of these, perhaps no stock market trend is more popular than value investing, which is a strategy that has proven to be successful in all sorts of market environments. Value investors use tried-and-true metrics and fundamental analysis to find companies that they believe are undervalued at their current share price levels.
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 to watch right now is Douglas Emmett (DEI). DEI is currently sporting a Zacks Rank #2 (Buy), as well as a Value grade of A. The stock has a Forward P/E ratio of 11.11. This compares to its industry's average Forward P/E of 16.70. Over the past 52 weeks, DEI's Forward P/E has been as high as 13.48 and as low as 9.01, with a median of 11.23.
We should also highlight that DEI has a P/B ratio of 0.75. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. DEI's current P/B looks attractive when compared to its industry's average P/B of 1.82. Over the past 12 months, DEI's P/B has been as high as 0.93 and as low as 0.60, with a median of 0.76.
Value investors also use the P/S ratio. The P/S ratio is calculated as price divided by sales. This is a preferred metric because revenue can't really be manipulated, so sales are often a truer performance indicator. DEI has a P/S ratio of 1.94. This compares to its industry's average P/S of 3.98.
Finally, investors should note that DEI has a P/CF ratio of 6.24. This data point considers a firm's operating cash flow and is frequently used to find companies that are undervalued when considering their solid cash outlook. DEI's current P/CF looks attractive when compared to its industry's average P/CF of 15.11. Over the past year, DEI's P/CF has been as high as 8.61 and as low as 4.95, with a median of 6.56.
Value investors will likely look at more than just these metrics, but the above data helps show that Douglas Emmett is likely undervalued currently. And when considering the strength of its earnings outlook, DEI sticks out as one of the market's strongest value stocks.
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Douglas Emmett, Inc. (DEI): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).