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.
Looking at the history of these trends, perhaps none is more beloved than value investing. This strategy simply looks to identify companies that are being undervalued by the broader market. Value investors use tried-and-true metrics and fundamental analysis to find companies that they believe are undervalued at their current share price levels.
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.
PG&E (PCG) is a stock many investors are watching right now. PCG is currently sporting a Zacks Rank #2 (Buy) and an A for Value. The stock has a Forward P/E ratio of 9.36. This compares to its industry's average Forward P/E of 15.85. Over the last 12 months, PCG's Forward P/E has been as high as 14.79 and as low as 8.28, with a median of 10.97.
PCG is also sporting a PEG ratio of 1.05. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. PCG's PEG compares to its industry's average PEG of 1.56. PCG's PEG has been as high as 1.54 and as low as 0.88, with a median of 1.13, all within the past year.
Investors should also recognize that PCG has a P/B ratio of 1.34. 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 solid versus its industry's average P/B of 2.69. Within the past 52 weeks, PCG's P/B has been as high as 2.09 and as low as 1.16, with a median of 1.54.
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. PCG has a P/S ratio of 1.69. This compares to its industry's average P/S of 2.56.
Finally, investors will want to recognize that PCG has a P/CF ratio of 4.89. 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 12.66. Over the past 52 weeks, PCG's P/CF has been as high as 6.87 and as low as 4.26, with a median of 5.49.
These figures are just a handful of the metrics value investors tend to look at, but they help show that PG&E is likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, PCG feels like a great value stock at the moment.
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Pacific Gas & Electric Co. (PCG): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).