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.
Considering these trends, value investing is clearly one of the most preferred ways to find strong stocks in any type of market. Value investors rely on traditional forms of analysis on key valuation metrics to find stocks that they believe are undervalued, leaving room for profits.
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.
One company value investors might notice is Ovintiv (OVV). OVV is currently sporting a Zacks Rank #2 (Buy), as well as a Value grade of A. The stock is trading with a P/E ratio of 7.84, which compares to its industry's average of 11.71. Over the past year, OVV's Forward P/E has been as high as 9.97 and as low as 5.23, with a median of 7.66.
Another valuation metric that we should highlight is OVV's P/B ratio of 1.02. 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 company's current P/B looks solid when compared to its industry's average P/B of 2.69. Over the past 12 months, OVV's P/B has been as high as 1.16 and as low as 0.80, with a median of 1.01.
Value investors also love the P/S ratio, which is calculated by simply dividing a stock's price with the company's sales. Some people prefer this metric because sales are harder to manipulate on an income statement. This means it could be a truer performance indicator. OVV has a P/S ratio of 1.79. This compares to its industry's average P/S of 2.31.
Finally, investors should note that OVV has a P/CF ratio of 3.78. 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 6.88. Over the past 52 weeks, OVV's P/CF has been as high as 3.97 and as low as 2.29, with a median of 3.24.
Value investors will likely look at more than just these metrics, but the above data helps show that Ovintiv is likely undervalued currently. And when considering the strength of its earnings outlook, OVV sticks out as one of the market's strongest value stocks.
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Ovintiv Inc. (OVV): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).