The proven Zacks Rank system focuses on earnings estimates and estimate revisions to find winning stocks. Nevertheless, we know that our readers all have their own perspectives, so we are always looking at the latest trends in value, growth, and momentum to find 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 use fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.
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 to watch right now is Primoris Services (PRIM). PRIM 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 24.26. This compares to its industry's average Forward P/E of 30.71. Over the past year, PRIM's Forward P/E has been as high as 24.26 and as low as 11.89, with a median of 17.78.
Investors should also recognize that PRIM has a P/B ratio of 4.53. 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 solid versus its industry's average P/B of 7.95. PRIM's P/B has been as high as 4.53 and as low as 1.96, with a median of 2.86, over the past year.
Value investors also frequently use the P/S ratio. This metric is found by dividing a stock's price with the company's revenue. Some people prefer this metric because sales are harder to manipulate on an income statement. This means it could be a truer performance indicator. PRIM has a P/S ratio of 0.73. This compares to its industry's average P/S of 1.34.
Finally, investors should note that PRIM has a P/CF ratio of 21.39. 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. PRIM's current P/CF looks attractive when compared to its industry's average P/CF of 30.73. Over the past 52 weeks, PRIM's P/CF has been as high as 21.39 and as low as 9.65, with a median of 14.18.
These are only a few of the key metrics included in Primoris Services's strong Value grade, but they help show that the stock is likely undervalued right now. When factoring in the strength of its earnings outlook, PRIM looks like an impressive value stock at the moment.
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Primoris Services Corporation (PRIM): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).