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.
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 rely on traditional forms of analysis on key valuation metrics to find stocks that they believe are undervalued, leaving room for profits.
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 company to watch right now is Colfax (CFX). CFX is currently holding a Zacks Rank of #2 (Buy) and a Value grade of A. The stock is trading with a P/E ratio of 9.98, which compares to its industry's average of 17.76. Over the past year, CFX's Forward P/E has been as high as 15.58 and as low as 7.24, with a median of 13.82.
CFX is also sporting a PEG ratio of 0.69. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. CFX's PEG compares to its industry's average PEG of 1.49. Within the past year, CFX's PEG has been as high as 1.34 and as low as 0.51, with a median of 1.06.
Value investors also use the P/S ratio. The P/S ratio is is calculated as price divided by sales. This is a prefered metric because revenue can't really be manipulated, so sales are often a truer performance indicator. CFX has a P/S ratio of 0.83. This compares to its industry's average P/S of 1.53.
Finally, our model also underscores that CFX has a P/CF ratio of 7.17. 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. CFX's current P/CF looks attractive when compared to its industry's average P/CF of 15.58. Within the past 12 months, CFX's P/CF has been as high as 10.17 and as low as 5.26, with a median of 8.48.
These are just a handful of the figures considered in Colfax'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 CFX is an impressive value stock right now.
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