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 rely on traditional forms of analysis on key valuation metrics to find stocks that they believe are undervalued, leaving room for profits.
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.
One company value investors might notice is LCI Industries (LCII). LCII is currently sporting a Zacks Rank #2 (Buy), as well as an A grade for Value. The stock holds a P/E ratio of 14.19, while its industry has an average P/E of 18.84. Over the past year, LCII's Forward P/E has been as high as 19.04 and as low as 10.65, with a median of 14.77.
Investors should also recognize that LCII has a P/B ratio of 1.78. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. LCII's current P/B looks attractive when compared to its industry's average P/B of 3.42. LCII's P/B has been as high as 2.27 and as low as 1.39, with a median of 1.86, over the past year.
Value investors also love the P/S ratio, which is calculated by simply dividing a stock's price with the company's sales. This is a preferred metric because revenue can't really be manipulated, so sales are often a truer performance indicator. LCII has a P/S ratio of 0.68. This compares to its industry's average P/S of 0.7.
Value investors will likely look at more than just these metrics, but the above data helps show that LCI Industries is likely undervalued currently. And when considering the strength of its earnings outlook, LCII sticks out as one of the market's strongest value stocks.
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LCI Industries (LCII): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).