The proven Zacks Rank system focuses on earnings estimates and estimate revisions to find winning stocks. Nevertheless, we know that our readers all have their own perspectives, so we are always looking at the latest trends in value, growth, and momentum to find strong picks.
Of these, value investing is easily one of the most popular ways to find great stocks in any market environment. Value investors rely on traditional forms of analysis on key valuation metrics to find stocks that they believe are undervalued, leaving room for profits.
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 stock to keep an eye on is Adecco (AHEXY). AHEXY is currently sporting a Zacks Rank #2 (Buy), as well as a Value grade of A. The stock holds a P/E ratio of 8.85, while its industry has an average P/E of 15.33. Over the past year, AHEXY's Forward P/E has been as high as 12.18 and as low as 6.87, with a median of 9.80.
Investors will also notice that AHEXY has a PEG ratio of 0.98. 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. AHEXY's industry has an average PEG of 1.65 right now. Over the past 52 weeks, AHEXY's PEG has been as high as 4.56 and as low as 0.73, with a median of 1.09.
We should also highlight that AHEXY has a P/B ratio of 1.2. 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 company's current P/B looks solid when compared to its industry's average P/B of 2.74. AHEXY's P/B has been as high as 1.62 and as low as 0.97, with a median of 1.28, over the past year.
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. AHEXY has a P/S ratio of 0.18. This compares to its industry's average P/S of 0.32.
Finally, we should also recognize that AHEXY has a P/CF ratio of 7.61. This metric focuses on a firm's operating cash flow and is often used to find stocks that are undervalued based on the strength of their cash outlook. AHEXY's P/CF compares to its industry's average P/CF of 13.78. Within the past 12 months, AHEXY's P/CF has been as high as 9.89 and as low as 6.32, with a median of 8.24.
These are just a handful of the figures considered in Adecco'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 AHEXY is an impressive value stock right now.
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This article originally published on Zacks Investment Research (zacks.com).
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
