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.
Considering these trends, value investing is clearly one of the most preferred ways to find strong stocks in any type of market. Value investors use fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.
In addition to the Zacks Rank, investors looking for stocks with specific traits can utilize our Style Scores system. Of course, value investors will be most interested in the system's "Value" category. Stocks with "A" grades for Value and high Zacks Ranks are among the best value stocks available at any given moment.
One company to watch right now is Honda Motor Co. (HMC). HMC is currently sporting a Zacks Rank #1 (Strong Buy) and an A for Value.
We should also highlight that HMC has a P/B ratio of 0.63. The P/B ratio pits a stock's market value against 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 1.09. Within the past 52 weeks, HMC's P/B has been as high as 0.66 and as low as 0.44, with a median of 0.55.
Value investors also frequently use the P/S ratio. This metric is found by dividing a stock's price with the company's revenue. This is a preferred metric because revenue can't really be manipulated, so sales are often a truer performance indicator. HMC has a P/S ratio of 0.34. This compares to its industry's average P/S of 0.37.
Finally, we should also recognize that HMC has a P/CF ratio of 5.08. 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. This company's current P/CF looks solid when compared to its industry's average P/CF of 6.35. HMC's P/CF has been as high as 5.31 and as low as 3.12, with a median of 4.11, all within the past year.
These are just a handful of the figures considered in Honda Motor Co.'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 HMC is an impressive value stock right now.
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Honda Motor Co., Ltd. (HMC): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).