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.
Of these, perhaps no stock market trend is more popular than value investing, which is a strategy that has proven to be successful in all sorts of market environments. 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.
Progress Software (PRGS) is a stock many investors are watching right now. PRGS is currently sporting a Zacks Rank #1 (Strong Buy) and an A for Value.
We should also highlight that PRGS has a P/B ratio of 4. The P/B is a method of comparing a stock's market value to 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 6.69. Over the past 12 months, PRGS's P/B has been as high as 7.05 and as low as 3.95, with a median of 5.89.
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. PRGS has a P/S ratio of 1.52. This compares to its industry's average P/S of 3.57.
Finally, investors will want to recognize that PRGS has a P/CF ratio of 9.86. 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. PRGS's P/CF compares to its industry's average P/CF of 16.96. Over the past 52 weeks, PRGS's P/CF has been as high as 18.02 and as low as 9.74, with a median of 14.83.
Value investors will likely look at more than just these metrics, but the above data helps show that Progress Software is likely undervalued currently. And when considering the strength of its earnings outlook, PRGS sticks out as one of the market's strongest value stocks.
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Progress Software Corporation (PRGS): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).