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 fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.
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 Avnet (AVT). AVT is currently sporting a Zacks Rank #2 (Buy), as well as an A grade for Value. The stock has a Forward P/E ratio of 10.47. This compares to its industry's average Forward P/E of 13.59. Over the past 52 weeks, AVT's Forward P/E has been as high as 16.75 and as low as 8.05, with a median of 10.50.
AVT is also sporting a PEG ratio of 0.36. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. AVT's PEG compares to its industry's average PEG of 0.45. Over the last 12 months, AVT's PEG has been as high as 1.89 and as low as 0.35, with a median of 0.81.
Another notable valuation metric for AVT is its P/B ratio of 0.89. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. This stock's P/B looks attractive against its industry's average P/B of 1.97. Over the past 12 months, AVT's P/B has been as high as 1.00 and as low as 0.71, with a median of 0.91.
Value investors also use the P/S ratio. The P/S ratio is calculated as price divided by sales. This is a popular metric because sales are harder to manipulate on an income statement, so they are often considered a better performance indicator. AVT has a P/S ratio of 0.27. This compares to its industry's average P/S of 0.46.
Finally, investors will want to recognize that AVT has a P/CF ratio of 12.36. 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 stock's P/CF looks attractive against its industry's average P/CF of 17.11. Over the past year, AVT's P/CF has been as high as 13.11 and as low as 7.28, with a median of 9.98.
Value investors will likely look at more than just these metrics, but the above data helps show that Avnet is likely undervalued currently. And when considering the strength of its earnings outlook, AVT sticks out as one of the market's strongest value stocks.
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Avnet, Inc. (AVT): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).