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.
Considering these trends, value investing is clearly one of the most preferred ways to find strong stocks in any type of market. Value investors use fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.
In addition to the Zacks Rank, investors looking for stocks with specific traits can utilize our Style Scores system. Of course, value investors will be most interested in the system's "Value" category. Stocks with "A" grades for Value and high Zacks Ranks are among the best value stocks available at any given moment.
One company value investors might notice is Range Resources (RRC). RRC is currently holding a Zacks Rank of #2 (Buy) and a Value grade of A.
Another notable valuation metric for RRC is its P/B ratio of 0.75. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. This stock's P/B looks attractive against its industry's average P/B of 1.63. RRC's P/B has been as high as 0.83 and as low as 0.55, with a median of 0.69, 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. Some people prefer this metric because sales are harder to manipulate on an income statement. This means it could be a truer performance indicator. RRC has a P/S ratio of 1.47. This compares to its industry's average P/S of 1.93.
Finally, investors should note that RRC has a P/CF ratio of 4.70. This metric takes into account a company's operating cash flow and can be used to find stocks that are undervalued based on their solid cash outlook. RRC's P/CF compares to its industry's average P/CF of 4.97. Over the past 52 weeks, RRC's P/CF has been as high as 7.20 and as low as 3.04, with a median of 4.44.
These figures are just a handful of the metrics value investors tend to look at, but they help show that Range Resources is likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, RRC feels like a great value stock at the moment.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.