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.
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 use tried-and-true metrics and fundamental analysis to find companies that they believe are undervalued at their current share price levels.
On top of the Zacks Rank, investors can also look at our innovative Style Scores system to find stocks with specific traits. For example, value investors will want to focus on the "Value" category. Stocks with high Zacks Ranks and "A" grades for Value will be some of the highest-quality value stocks on the market today.
Charter Communications (CHTR) is a stock many investors are watching right now. CHTR is currently sporting a Zacks Rank of #2 (Buy), as well as an A grade for Value.
Investors will also notice that CHTR has a PEG ratio of 0.44. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. CHTR's industry currently sports an average PEG of 1.24. Within the past year, CHTR's PEG has been as high as 1.67 and as low as 0.39, with a median of 0.59.
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 prefered metric because revenue can't really be manipulated, so sales are often a truer performance indicator. CHTR has a P/S ratio of 0.94. This compares to its industry's average P/S of 0.98.
Finally, we should also recognize that CHTR has a P/CF ratio of 3.82. 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. This company's current P/CF looks solid when compared to its industry's average P/CF of 5.96. Over the past year, CHTR's P/CF has been as high as 4.43 and as low as 2.80, with a median of 3.56.
These are only a few of the key metrics included in Charter Communications'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, CHTR looks like an impressive 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.
