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.
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 rely on traditional forms of analysis on key valuation metrics to find stocks that they believe are undervalued, leaving room for profits.
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 LyondellBasell Industries (LYB). LYB is currently sporting a Zacks Rank #1 (Strong Buy), as well as an A grade for Value. The stock has a Forward P/E ratio of 12.75. This compares to its industry's average Forward P/E of 13.47. Over the past year, LYB's Forward P/E has been as high as 14.89 and as low as 8.44, with a median of 11.25.
Investors should also recognize that LYB has a P/B ratio of 1.4. 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 company's current P/B looks solid when compared to its industry's average P/B of 2.08. Over the past year, LYB's P/B has been as high as 2.33 and as low as 1.30, with a median of 1.78.
Value investors also use the P/S ratio. The P/S ratio is calculated as price divided by sales. This is a popular metric because sales are harder to manipulate on an income statement, so they are often considered a better performance indicator. LYB has a P/S ratio of 0.73. This compares to its industry's average P/S of 0.76.
These are just a handful of the figures considered in LyondellBasell Industries'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 LYB is an impressive value stock right now.
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LyondellBasell Industries N.V. (LYB): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).