Here at Zacks, our focus is on the proven Zacks Rank system, which emphasizes earnings estimates and estimate revisions to find great stocks. Nevertheless, we are always paying attention to the latest value, growth, and momentum trends to underscore 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 tried-and-true metrics and fundamental analysis to find companies that they believe are undervalued at their current share price levels.
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 to watch right now is Orix Corp Ads (IX). IX is currently sporting a Zacks Rank #2 (Buy), as well as an A grade for Value.
Another valuation metric that we should highlight is IX's P/B ratio of 1.06. 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 3.06. Over the past 12 months, IX's P/B has been as high as 1.11 and as low as 0.76, with a median of 0.89.
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. IX has a P/S ratio of 1.75. This compares to its industry's average P/S of 2.21.
Finally, our model also underscores that IX has a P/CF ratio of 6.00. 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. This stock's P/CF looks attractive against its industry's average P/CF of 17.52. Over the past year, IX's P/CF has been as high as 6.42 and as low as 4.20, with a median of 4.72.
These figures are just a handful of the metrics value investors tend to look at, but they help show that Orix Corp Ads is likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, IX feels like a great value stock at the moment.
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Orix Corp Ads (IX): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).