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.
Considering these trends, value investing is clearly one of the most preferred ways to find strong stocks in any type of 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.
Zacks has developed the innovative Style Scores system to highlight stocks with specific traits. For example, value investors will be interested in stocks with great grades in the "Value" category. When paired with a high Zacks Rank, "A" grades in the Value category are among the strongest value stocks on the market today.
One company to watch right now is KBR (KBR). KBR is currently holding a Zacks Rank #2 (Buy) and a Value grade of A. The stock is trading with a P/E ratio of 11.99, which compares to its industry's average of 22.42. Over the past year, KBR's Forward P/E has been as high as 19.21 and as low as 11.18, with a median of 13.12.
KBR is also sporting a PEG ratio of 0.90. 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. KBR's PEG compares to its industry's average PEG of 1.50. Over the last 12 months, KBR's PEG has been as high as 1.27 and as low as 0.75, with a median of 0.94.
We should also highlight that KBR has a P/B ratio of 4.22. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. KBR's current P/B looks attractive when compared to its industry's average P/B of 6.15. Over the past year, KBR's P/B has been as high as 6.34 and as low as 3.94, with a median of 4.79.
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. KBR has a P/S ratio of 0.59. This compares to its industry's average P/S of 1.31.
These are only a few of the key metrics included in KBR'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, KBR looks like an impressive value stock at the moment.
Beyond Nvidia: AI's Second Wave Is Here
The AI revolution has already minted millionaires. But the stocks everyone knows about aren't likely to keep delivering the biggest profits. AI’s second wave is moving from infrastructure to implementation and these companies are at the forefront of this transition, positioned to become what Amazon and Google were to the internet era.
See Stocks Now >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
KBR, Inc. (KBR): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).