Are Investors Undervaluing F5 Networks (FFIV) Right Now?
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.
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 F5 Networks (FFIV). FFIV is currently sporting a Zacks Rank of #2 (Buy), as well as an A grade for Value.
Another notable valuation metric for FFIV is its P/B ratio of 4.27. The P/B ratio pits a stock's market value against 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 10.37. Over the past 12 months, FFIV's P/B has been as high as 5.70 and as low as 2.85, with a median of 4.42.
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. FFIV has a P/S ratio of 3.87. This compares to its industry's average P/S of 4.34.
These are only a few of the key metrics included in F5 Networks'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, FFIV looks like an impressive value stock at the moment.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.