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.
Of these, value investing is easily one of the most popular ways to find great stocks in any market environment. 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.
Information Services Group (III) is a stock many investors are watching right now. III is currently sporting a Zacks Rank #2 (Buy), as well as an A grade for Value.
Investors will also notice that III has a PEG ratio of 0.84. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. III's industry currently sports an average PEG of 1.29. Over the last 12 months, III's PEG has been as high as 1.20 and as low as 0.59, with a median of 0.79.
Another valuation metric that we should highlight is III's P/B ratio of 2.76. 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 4.63. III's P/B has been as high as 2.84 and as low as 1.52, with a median of 1.86, 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 preferred metric because revenue can't really be manipulated, so sales are often a truer performance indicator. III has a P/S ratio of 0.79. This compares to its industry's average P/S of 1.3.
Value investors will likely look at more than just these metrics, but the above data helps show that Information Services Group is likely undervalued currently. And when considering the strength of its earnings outlook, III sticks out as one of the market's strongest value stocks.
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Information Services Group, Inc. (III): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).