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, value investing is easily one of the most popular ways to find great stocks in any market environment. Value investors use a variety of methods, including tried-and-true valuation metrics, to find these stocks.
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.
Herbalife Ltd (HLF) is a stock many investors are watching right now. HLF is currently sporting a Zacks Rank #2 (Buy), as well as a Value grade of A.
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. HLF has a P/S ratio of 0.24. This compares to its industry's average P/S of 0.25.
Finally, investors will want to recognize that HLF has a P/CF ratio of 2.12. 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. HLF's P/CF compares to its industry's average P/CF of 3.52. Over the past 52 weeks, HLF's P/CF has been as high as 4.26 and as low as 1.39, with a median of 2.19.
Value investors will likely look at more than just these metrics, but the above data helps show that Herbalife Ltd is likely undervalued currently. And when considering the strength of its earnings outlook, HLF sticks out as one of the market's strongest value stocks.
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Herbalife Ltd (HLF): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).