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.
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 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 Hennes & Mauritz (HNNMY). HNNMY is currently sporting a Zacks Rank #2 (Buy), as well as a Value grade of A.
Another valuation metric that we should highlight is HNNMY's P/B ratio of 6.09. 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 7.52. HNNMY's P/B has been as high as 6.27 and as low as 4.01, with a median of 4.87, over the past year.
Finally, our model also underscores that HNNMY has a P/CF ratio of 8.11. This figure highlights a company's operating cash flow and can be used to find firms that are undervalued when considering their impressive cash outlook. This stock's P/CF looks attractive against its industry's average P/CF of 19.09. Over the past 52 weeks, HNNMY's P/CF has been as high as 9.27 and as low as 6.08, with a median of 7.14.
Value investors will likely look at more than just these metrics, but the above data helps show that Hennes & Mauritz is likely undervalued currently. And when considering the strength of its earnings outlook, HNNMY sticks out as one of the market's strongest value stocks.
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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.
