Here at Zacks, we focus on our proven ranking system, which puts earnings estimates and valuation revisions at the forefront to find winning stocks. But we also understand that investors develop their own strategies. That’s why we’re constantly looking for the latest trends in value, growth, and momentum to find strong companies for our readers.
Of these, value investing is easily one of the most popular ways to find great stocks in any market environment. Value investors use fundamental analysis and traditional valuation metrics to find stocks that they believe are undervalued by the market as a whole.
In addition to the Zacks rank, investors looking for stocks with certain characteristics can use our style scores system. Of course, value investors will be most interested in the “value” category of the system. Stocks rated “A” for Value and High Zacks Ranks are among the best-value stocks available at any given time.
One company to watch right now is Beacon Roofing Supply (BECN Quick Quote)BECN – – Free report). BECN currently has a Zacks rank of # 2 (Buy) and an A for Value. The stock holds a P / E of 13.42 while the industry has an average P / E of 23.21. For the past 52 weeks, BECN’s forward P / E was 17.80 and 4.55 with a median of 13.58.
Investors should also note that BECN has a PEG ratio of 1.09. This popular metric is similar to the widely known P / E ratio, except that the P / E ratio also takes into account the company’s expected earnings growth rate. BECN’s industry currently has an average PEG of 1.85. BECN’s PEG last year was 1.34 and 1.08 with a median of 1.22.
Value investors also love P / E, which is calculated by simply dividing the price of a stock by the company’s sales. This is a preferred metric because sales cannot really be manipulated and therefore sales are often a true performance indicator. BECN has a P / S ratio of 0.41. This compares to the industry’s average P / S of 0.79.
Ultimately, investors want to see that BECN has a P / CF ratio of 9.31. This metric takes into account a company’s cash flow from operations and can be used to find stocks that are undervalued due to their solid cash outlook. BECN’s current P / CF looks attractive compared to the industry’s average P / CF of 15.41. For the past 12 months, BECN’s P / CF was 10.31 and 2.85 with a median of 7.73.
Value investors are likely to look more than just these metrics, but the data above shows that the Beacon Roofing Supply is likely undervalued right now. Given the strength of its earnings outlook, BECN is one of the strongest stocks in the market.