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.
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 rely on traditional forms of analysis on key valuation metrics to find stocks that they believe are undervalued, leaving room for profits.
Luckily, Zacks has developed its own Style Scores system in an effort to find stocks with specific traits. Value investors will be interested in the system's "Value" category. Stocks with both "A" grades in the Value category and high Zacks Ranks are among the strongest value stocks on the market right now.
One company to watch right now is Gladstone Commercial (GOOD). GOOD is currently sporting a Zacks Rank #2 (Buy), as well as a Value grade of A. The stock holds a P/E ratio of 8.68, while its industry has an average P/E of 16.70. Over the last 12 months, GOOD's Forward P/E has been as high as 12.23 and as low as 8.66, with a median of 10.39.
GOOD is also sporting a PEG ratio of 1.45. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. GOOD's PEG compares to its industry's average PEG of 1.52. Over the past 52 weeks, GOOD's PEG has been as high as 2.04 and as low as 1.44, with a median of 1.73.
Value investors also frequently use the P/S ratio. This metric is found by dividing a stock's price with the company's revenue. Some people prefer this metric because sales are harder to manipulate on an income statement. This means it could be a truer performance indicator. GOOD has a P/S ratio of 3.71. This compares to its industry's average P/S of 4.2.
Finally, investors will want to recognize that GOOD has a P/CF ratio of 7.63. 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 company's current P/CF looks solid when compared to its industry's average P/CF of 14.93. Over the past 52 weeks, GOOD's P/CF has been as high as 10.69 and as low as 7.61, with a median of 8.84.
Another great REIT and Equity Trust - Other stock you could consider is Hudson Pacific Properties (HPP), which is a Zacks Rank of #2 (Buy) stock with a Value Score of A.
Shares of Hudson Pacific Properties currently hold a Forward P/E ratio of 14.59, and its PEG ratio is 0.55. In comparison, its industry sports average P/E and PEG ratios of 16.70 and 1.52.
HPP's Forward P/E has been as high as 15.55 and as low as 4.61, with a median of 6.38. During the same time period, its PEG ratio has been as high as 0.69, as low as 0.53, with a median of 0.60.
Furthermore, Hudson Pacific Properties holds a P/B ratio of 0.33 and its industry's price-to-book ratio is 1.94. HPP's P/B has been as high as 0.36, as low as 0.10, with a median of 0.16 over the past 12 months.
These are just a handful of the figures considered in Gladstone Commercial and Hudson Pacific Properties's great Value grade. Still, they help show that the stock is likely being undervalued at the moment. Add this to the strength of its earnings outlook, and we can clearly see that GOOD and HPP is an impressive value stock right now.
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Gladstone Commercial Corporation (GOOD): Free Stock Analysis Report
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This article originally published on Zacks Investment Research (zacks.com).