Here at Zacks, our focus is on the proven Zacks Rank system, which emphasizes earnings estimates and estimate revisions to find great stocks. Nevertheless, we a
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.
Of these, value investing is easily one of the most popular ways to find great stocks in any market environment. Value investors use a variety of methods, including tried-and-true valuation metrics, to find these stocks.
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 Avnet (AVT). AVT is currently sporting a Zacks Rank #2 (Buy) and an A for Value. The stock holds a P/E ratio of 10.47, while its industry has an average P/E of 15.24. Over the last 12 months, AVT's Forward P/E has been as high as 16.75 and as low as 8.05, with a median of 10.50.
Investors should also note that AVT holds a PEG ratio of 0.36. 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. AVT's industry has an average PEG of 0.50 right now. Within the past year, 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 is used to compare a stock's market value with its book value, which is defined as total assets minus total liabilities. This stock's P/B looks solid versus its industry's average P/B of 2.13. Within the past 52 weeks, 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 love the P/S ratio, which is calculated by simply dividing a stock's price with the company's 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 0.51.
Finally, investors will want to recognize that AVT has a P/CF ratio of 12.36. This data point considers a firm's operating cash flow and is frequently used to find companies that are undervalued when considering their solid cash outlook. AVT's P/CF compares to its industry's average P/CF of 18.53. 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.
These figures are just a handful of the metrics value investors tend to look at, but they help show that Avnet is likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, AVT feels like a great value stock at the moment.
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