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.
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 a variety of methods, including tried-and-true valuation metrics, to find these stocks.
Zacks has developed the innovative Style Scores system to highlight stocks with specific traits. For example, value investors will be interested in stocks with great grades in the "Value" category. When paired with a high Zacks Rank, "A" grades in the Value category are among the strongest value stocks on the market today.
One company value investors might notice is Itron (ITRI). ITRI is currently sporting a Zacks Rank #1 (Strong Buy) and an A for Value. The stock has a Forward P/E ratio of 19.59. This compares to its industry's average Forward P/E of 23.66. Over the past 52 weeks, ITRI's Forward P/E has been as high as 25.88 and as low as 16.50, with a median of 21.46.
Another valuation metric that we should highlight is ITRI's P/B ratio of 3.37. The P/B ratio is used to compare a stock's market value with 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 4.16. Over the past year, ITRI's P/B has been as high as 4.10 and as low as 2.78, with a median of 3.47.
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. ITRI has a P/S ratio of 1.82. This compares to its industry's average P/S of 5.43.
Finally, we should also recognize that ITRI has a P/CF ratio of 16.89. 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. ITRI's current P/CF looks attractive when compared to its industry's average P/CF of 25.64. ITRI's P/CF has been as high as 20.38 and as low as 13.50, with a median of 16.93, all within the past year.
These are just a handful of the figures considered in Itron'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 ITRI is an impressive value stock right now.
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Itron, Inc. (ITRI): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).