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 a variety of methods, including tried-and-true valuation metrics, to find these stocks.
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 value investors might notice is Accel Entertainment (ACEL). ACEL is currently sporting a Zacks Rank #2 (Buy) and an A for Value. The stock is trading with P/E ratio of 14.22 right now. For comparison, its industry sports an average P/E of 24.18. Over the past year, ACEL's Forward P/E has been as high as 17.76 and as low as 11.88, with a median of 14.32.
Another valuation metric that we should highlight is ACEL's P/B ratio of 3.59. 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 attractive against its industry's average P/B of 8.56. ACEL's P/B has been as high as 4.92 and as low as 3.14, with a median of 3.81, 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. ACEL has a P/S ratio of 0.75. This compares to its industry's average P/S of 1.29.
Finally, our model also underscores that ACEL has a P/CF ratio of 8.80. 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 stock's P/CF looks attractive against its industry's average P/CF of 24.73. ACEL's P/CF has been as high as 11.23 and as low as 7.35, with a median of 8.96, all within the past year.
These are just a handful of the figures considered in Accel Entertainment'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 ACEL is an impressive value stock right now.
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Accel Entertainment, Inc. (ACEL): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).