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 rely on traditional forms of analysis on key valuation metrics to find stocks that they believe are undervalued, leaving room for profits.
Zacks has developed the innovative Style Scores system to highlight stocks with specific traits. For example, value investors will be interested in stocks with great grades in the "Value" category. When paired with a high Zacks Rank, "A" grades in the Value category are among the strongest value stocks on the market today.
One company to watch right now is Henry Schein (HSIC). HSIC is currently holding a Zacks Rank #2 (Buy) and a Value grade of A. The stock holds a P/E ratio of 13.27, while its industry has an average P/E of 16.98. HSIC's Forward P/E has been as high as 15.82 and as low as 12.57, with a median of 13.90, all within the past year.
We should also highlight that HSIC has a P/B ratio of 2.01. 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 attractive against its industry's average P/B of 5.38. Over the past 12 months, HSIC's P/B has been as high as 2.53 and as low as 1.92, with a median of 2.16.
Value investors also use the P/S ratio. The P/S ratio is calculated as price divided by 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. HSIC has a P/S ratio of 0.74. This compares to its industry's average P/S of 1.39.
Finally, our model also underscores that HSIC has a P/CF ratio of 11.89. 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 stock's P/CF looks attractive against its industry's average P/CF of 17.91. Over the past 52 weeks, HSIC's P/CF has been as high as 15.66 and as low as 10.92, with a median of 12.77.
These are only a few of the key metrics included in Henry Schein'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, HSIC looks like an impressive value stock at the moment.
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Henry Schein, Inc. (HSIC): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).