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 use fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.
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.
One stock to keep an eye on is Macy's (M). M is currently sporting a Zacks Rank #2 (Buy), as well as an A grade for Value. The stock is trading with a P/E ratio of 9.15, which compares to its industry's average of 14.12. Over the last 12 months, M's Forward P/E has been as high as 9.61 and as low as 4.69, with a median of 6.13.
Investors should also recognize that M has a P/B ratio of 1.06. The P/B is a method of comparing a stock's market value to 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 2.22. Within the past 52 weeks, M's P/B has been as high as 1.21 and as low as 0.61, with a median of 0.86.
Finally, investors should note that M has a P/CF ratio of 3.47. This metric takes into account a company's operating cash flow and can be used to find stocks that are undervalued based on their solid cash outlook. M's P/CF compares to its industry's average P/CF of 7.53. M's P/CF has been as high as 5.04 and as low as 1.92, with a median of 2.70, all within the past year.
These are just a handful of the figures considered in Macy's'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 M is an impressive value stock right now.
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Macy's, Inc. (M): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).