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.
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 value investors might notice is GoodRx (GDRX). GDRX is currently sporting a Zacks Rank #2 (Buy), as well as an A grade for Value. The stock holds a P/E ratio of 9.21, while its industry has an average P/E of 16.38. Over the last 12 months, GDRX's Forward P/E has been as high as 17.97 and as low as 8.01, with a median of 11.31.
Investors should also note that GDRX holds a PEG ratio of 0.81. 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. GDRX's industry currently sports an average PEG of 1.33. GDRX's PEG has been as high as 1.49 and as low as 0.64, with a median of 1.02, all within the past year.
Value investors also use the P/S ratio. The P/S ratio is calculated as price divided by sales. This is a preferred metric because revenue can't really be manipulated, so sales are often a truer performance indicator. GDRX has a P/S ratio of 1.32. This compares to its industry's average P/S of 1.47.
These are only a few of the key metrics included in GoodRx'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, GDRX looks like an impressive value stock at the moment.
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GoodRx Holdings, Inc. (GDRX): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).