The proven Zacks Rank system focuses on earnings estimates and estimate revisions to find winning stocks. Nevertheless, we know that our readers all have their own perspectives, so we are always looking at the latest trends in value, growth, and momentum to find strong picks.
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.
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.
One company value investors might notice is Energy Transfer (ET). ET is currently sporting a Zacks Rank #1 (Strong Buy), as well as a Value grade of A. The stock has a Forward P/E ratio of 11.58. This compares to its industry's average Forward P/E of 13.94. Over the past 52 weeks, ET's Forward P/E has been as high as 14.92 and as low as 10.95, with a median of 12.23.
Investors should also note that ET holds a PEG ratio of 0.95. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. ET's industry has an average PEG of 1.48 right now. ET's PEG has been as high as 0.95 and as low as 0.45, with a median of 0.57, all within the past year.
We should also highlight that ET has a P/B ratio of 1.41. 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 stock's P/B looks attractive against its industry's average P/B of 2.26. ET's P/B has been as high as 1.71 and as low as 1.27, with a median of 1.44, over the past year.
Value investors also love the P/S ratio, which is calculated by simply dividing a stock's price with the company's 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. ET has a P/S ratio of 0.75. This compares to its industry's average P/S of 1.34.
Finally, we should also recognize that ET has a P/CF ratio of 6.02. 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. This company's current P/CF looks solid when compared to its industry's average P/CF of 9.75. Over the past 52 weeks, ET's P/CF has been as high as 7.57 and as low as 5.47, with a median of 6.25.
These are only a few of the key metrics included in Energy Transfer'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, ET looks like an impressive value stock at the moment.
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Energy Transfer LP (ET): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).