While the proven Zacks Rank places an emphasis on earnings estimates and estimate revisions to find strong stocks, we also know that investors tend to develop their own individual strategies. With this in mind, we are always looking at value, growth, and momentum trends to discover great companies.
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 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.
Simply Good Foods (SMPL) is a stock many investors are watching right now. SMPL is currently sporting a Zacks Rank #2 (Buy) and an A for Value. The stock has a Forward P/E ratio of 12.75. This compares to its industry's average Forward P/E of 15.08. Over the last 12 months, SMPL's Forward P/E has been as high as 20.55 and as low as 12.63, with a median of 17.34.
Value investors also love the P/S ratio, which is calculated by simply dividing a stock's price with the company's sales. Some people prefer this metric because sales are harder to manipulate on an income statement. This means it could be a truer performance indicator. SMPL has a P/S ratio of 0.73. This compares to its industry's average P/S of 1.8.
Value investors will likely look at more than just these metrics, but the above data helps show that Simply Good Foods is likely undervalued currently. And when considering the strength of its earnings outlook, SMPL sticks out as one of the market's strongest value stocks.
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The Simply Good Foods Company (SMPL): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).