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 rely on traditional forms of analysis on key valuation metrics to find stocks that they believe are undervalued, leaving room for profits.
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.
Progress Software (PRGS) is a stock many investors are watching right now. PRGS is currently sporting a Zacks Rank #2 (Buy), as well as a Value grade of A.
Another valuation metric that we should highlight is PRGS's P/B ratio of 4. 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. PRGS's current P/B looks attractive when compared to its industry's average P/B of 6.19. 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 frequently use the P/S ratio. This metric is found by dividing a stock's price with the company's revenue. This is a popular metric because sales are harder to manipulate on an income statement, so they are often considered a better performance indicator. PRGS has a P/S ratio of 1.71. This compares to its industry's average P/S of 4.15.
Finally, our model also underscores that PRGS has a P/CF ratio of 9.86. 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 16.48. PRGS's P/CF has been as high as 18.02 and as low as 9.74, with a median of 14.83, all within the past year.
These figures are just a handful of the metrics value investors tend to look at, but they help show that Progress Software is likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, PRGS feels like a great value stock at the moment.
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Progress Software Corporation (PRGS): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).