Here at Zacks, our focus is on the proven Zacks Rank system, which emphasizes earnings estimates and estimate revisions to find great stocks. Nevertheless, we are always paying attention to the latest value, growth, and momentum trends to underscore strong picks.
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.
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 company value investors might notice is Arrow Electronics (ARW). ARW is currently holding a Zacks Rank #2 (Buy) and a Value grade of A. The stock is trading with a P/E ratio of 9.44, which compares to its industry's average of 12.60. ARW's Forward P/E has been as high as 11.05 and as low as 8.04, with a median of 9.71, all within the past year.
ARW is also sporting a PEG ratio of 0.46. 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. ARW's PEG compares to its industry's average PEG of 0.62. ARW's PEG has been as high as 0.55 and as low as 0.40, with a median of 0.49, all within the past year.
Another notable valuation metric for ARW is its P/B ratio of 0.98. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. ARW's current P/B looks attractive when compared to its industry's average P/B of 1.51. Within the past 52 weeks, ARW's P/B has been as high as 1.22 and as low as 0.78, with a median of 1.02.
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. ARW has a P/S ratio of 0.23. This compares to its industry's average P/S of 0.38.
Finally, our model also underscores that ARW has a P/CF ratio of 9.63. This data point considers a firm's operating cash flow and is frequently used to find companies that are undervalued when considering their solid cash outlook. ARW's P/CF compares to its industry's average P/CF of 14.23. Over the past 52 weeks, ARW's P/CF has been as high as 11.55 and as low as 8.13, with a median of 10.03.
These figures are just a handful of the metrics value investors tend to look at, but they help show that Arrow Electronics is likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, ARW feels like a great value stock at the moment.
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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.
