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, perhaps no stock market trend is more popular than value investing, which is a strategy that has proven to be successful in all sorts of market environments. Value investors rely on traditional forms of analysis on key valuation metrics to find stocks that they believe are undervalued, leaving room for profits.
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 stock to keep an eye on is Teradata (TDC). TDC is currently holding a Zacks Rank #2 (Buy) and a Value grade of A. The stock is trading with P/E ratio of 9.74 right now. For comparison, its industry sports an average P/E of 15.08. Over the past 52 weeks, TDC's Forward P/E has been as high as 14.06 and as low as 8.41, with a median of 10.21.
We should also highlight that TDC has a P/B ratio of 11.81. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. This company's current P/B looks solid when compared to its industry's average P/B of 13.59. Within the past 52 weeks, TDC's P/B has been as high as 38.89 and as low as 10.80, with a median of 16.48.
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. TDC has a P/S ratio of 1.46. This compares to its industry's average P/S of 2.61.
These are just a handful of the figures considered in Teradata'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 TDC is an impressive value stock right now.
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Teradata Corporation (TDC): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).