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.
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.
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 Phibro Animal Health (PAHC). PAHC is currently sporting a Zacks Rank #2 (Buy), as well as a Value grade of A. The stock is trading with a P/E ratio of 15.37, which compares to its industry's average of 17.28. PAHC's Forward P/E has been as high as 16.56 and as low as 7.98, with a median of 12.28, all within the past year.
Investors will also notice that PAHC has a PEG ratio of 1.20. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. PAHC's PEG compares to its industry's average PEG of 1.93. Over the last 12 months, PAHC's PEG has been as high as 1.74 and as low as 0.30, with a median of 0.50.
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. PAHC has a P/S ratio of 1.03. This compares to its industry's average P/S of 1.7.
These are only a few of the key metrics included in Phibro Animal Health'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, PAHC looks like an impressive value stock at the moment.
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
Phibro Animal Health Corporation (PAHC) : Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).
