While the proven Zacks Rank places an emphasis on earnings estimates and estimate revisions to find strong stocks, we also know that investors tend to develop their own individual strategies. With this in mind, we are always looking at value, growth, and momentum trends to discover great companies.
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 fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.
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 company value investors might notice is PattersonUTI Energy (PTEN). PTEN is currently holding a Zacks Rank #2 (Buy) and a Value grade of A.
Another valuation metric that we should highlight is PTEN's P/B ratio of 0.62. The P/B ratio pits a stock's market value against 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 1.66. Over the past 12 months, PTEN's P/B has been as high as 1.06 and as low as 0.61, with a median of 0.80.
Value investors also use the P/S ratio. The P/S ratio is calculated as price divided by sales. This is a popular metric because sales are harder to manipulate on an income statement, so they are often considered a better performance indicator. PTEN has a P/S ratio of 0.7. This compares to its industry's average P/S of 1.36.
These are only a few of the key metrics included in PattersonUTI Energy's strong Value grade, but they help show that the stock is likely undervalued right now. When factoring in the strength of its earnings outlook, PTEN looks like an impressive value stock at the moment.
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Patterson-UTI Energy, Inc. (PTEN): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).