Here at Zacks, we focus on our proven ranking system, which places an emphasis on earnings estimates and estimate revisions, to find winning stocks. But we also understand that investors develop their own strategies, so we are constantly looking at the latest trends in value, growth, and momentum to find strong companies for our readers.
Of these, perhaps no stock market trend is more popular than value investing, which is a strategy that has proven to be successful in all sorts of market environments. 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 stock to keep an eye on is Carnival (CCL). CCL is currently sporting a Zacks Rank of #2 (Buy), as well as a Value grade of A. The stock is trading with a P/E ratio of 11.47, which compares to its industry's average of 17.87. Over the past year, CCL's Forward P/E has been as high as 20.07 and as low as 10.05, with a median of 13.08.
Investors will also notice that CCL has a PEG ratio of 0.61. 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. CCL's PEG compares to its industry's average PEG of 0.85. Over the past 52 weeks, CCL's PEG has been as high as 0.86 and as low as 0.54, with a median of 0.74.
Investors should also recognize that CCL has a P/B ratio of 2.70. 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. CCL's current P/B looks attractive when compared to its industry's average P/B of 3.86. CCL's P/B has been as high as 3.55 and as low as 2.10, with a median of 2.81, over the past year.
Finally, we should also recognize that CCL has a P/CF ratio of 5.86. 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. CCL's current P/CF looks attractive when compared to its industry's average P/CF of 13.76. Within the past 12 months, CCL's P/CF has been as high as 8.64 and as low as 5.10, with a median of 6.52.
These figures are just a handful of the metrics value investors tend to look at, but they help show that Carnival is likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, CCL 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.
