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 use a variety of methods, including tried-and-true valuation metrics, to find these stocks.
In addition to the Zacks Rank, investors looking for stocks with specific traits can utilize our Style Scores system. Of course, value investors will be most interested in the system's "Value" category. Stocks with "A" grades for Value and high Zacks Ranks are among the best value stocks available at any given moment.
One stock to keep an eye on is Afya (AFYA). AFYA is currently sporting a Zacks Rank #2 (Buy) and an A for Value. The stock is trading with P/E ratio of 8.67 right now. For comparison, its industry sports an average P/E of 11.51. Over the past 52 weeks, AFYA's Forward P/E has been as high as 12.39 and as low as 7.58, with a median of 9.02.
Investors will also notice that AFYA has a PEG ratio of 0.42. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. AFYA's PEG compares to its industry's average PEG of 0.80. Over the past 52 weeks, AFYA's PEG has been as high as 0.60 and as low as 0.25, with a median of 0.35.
Another notable valuation metric for AFYA is its P/B ratio of 1.81. 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 solid versus its industry's average P/B of 3.63. Within the past 52 weeks, AFYA's P/B has been as high as 2.42 and as low as 1.57, with a median of 2.03.
These figures are just a handful of the metrics value investors tend to look at, but they help show that Afya is likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, AFYA feels like a great value stock at the moment.
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This article originally published on Zacks Investment Research (zacks.com).