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.
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 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.
The Gap (GAP) is a stock many investors are watching right now. GAP is currently sporting a Zacks Rank of #1 (Strong Buy) and an A for Value. The stock is trading with P/E ratio of 11 right now. For comparison, its industry sports an average P/E of 19.09. Over the last 12 months, GAP's Forward P/E has been as high as 21.56 and as low as 9.98, with a median of 13.32.
Investors should also note that GAP holds a PEG ratio of 0.99. 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. GAP's industry has an average PEG of 1.56 right now. GAP's PEG has been as high as 4.60 and as low as 0.99, with a median of 1.32, all within the past year.
Another valuation metric that we should highlight is GAP's P/B ratio of 2.84. 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 solid versus its industry's average P/B of 6.98. Over the past 12 months, GAP's P/B has been as high as 4.07 and as low as 2.48, with a median of 2.94.
Finally, investors will want to recognize that GAP has a P/CF ratio of 6.83. 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. GAP's P/CF compares to its industry's average P/CF of 17.67. Within the past 12 months, GAP's P/CF has been as high as 14 and as low as 5.85, with a median of 7.18.
Value investors will likely look at more than just these metrics, but the above data helps show that The Gap is likely undervalued currently. And when considering the strength of its earnings outlook, GAP sticks out at as one of the market's strongest value stocks.
Zacks' Research Chief Names "Stock Most Likely to Double"
Our team of experts has just released the 5 stocks with the greatest probability of gaining +100% or more in the coming months. Of those 5, Director of Research Sheraz Mian highlights the one stock set to climb highest.
This top pick is among the most innovative financial firms. With a fast-growing customer base (already 50+ million) and a diverse set of cutting edge solutions, this stock is poised for big gains. Of course, all our elite picks aren’t winners but this one could far surpass earlier Zacks’ Stocks Set to Double like Nano-X Imaging which shot up +129.6% in little more than 9 months.
Free: See Our Top Stock And 4 Runners UpThe Gap, Inc. (GAP) : Free Stock Analysis Report
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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.
