Here at Zacks, we focus on our proven ranking system, which places an emphasis on earnings estimates and estimate revisions, to find winning stocks. But we also understand that investors develop their own strategies, so we are constantly looking at the latest trends in value, growth, and momentum to find strong companies for our readers.
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 stock to keep an eye on is Yum China (YUMC). YUMC is currently sporting a Zacks Rank #2 (Buy) and an A for Value. The stock is trading with P/E ratio of 16 right now. For comparison, its industry sports an average P/E of 20.51. YUMC's Forward P/E has been as high as 21.09 and as low as 14.45, with a median of 17.76, all within the past year.
Finally, our model also underscores that YUMC has a P/CF ratio of 11.87. This figure highlights a company's operating cash flow and can be used to find firms that are undervalued when considering their impressive cash outlook. This company's current P/CF looks solid when compared to its industry's average P/CF of 18.81. YUMC's P/CF has been as high as 14.79 and as low as 10.47, with a median of 12.61, all within the past year.
These are just a handful of the figures considered in Yum China'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 YUMC is an impressive value stock right now.
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Yum China (YUMC): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).