The proven Zacks Rank system focuses on earnings estimates and estimate revisions to find winning stocks. Nevertheless, we know that our readers all have their own perspectives, so we are always looking at the latest trends in value, growth, and momentum to find 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 a variety of methods, including tried-and-true valuation metrics, to find these stocks.
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 stock to keep an eye on is Builders FirstSource (BLDR). BLDR is currently sporting a Zacks Rank of #2 (Buy) and an A for Value. The stock is trading with a P/E ratio of 11.61, which compares to its industry's average of 19.90. Over the past 52 weeks, BLDR's Forward P/E has been as high as 12.56 and as low as 5.62, with a median of 9.24.
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. BLDR has a P/S ratio of 0.4. This compares to its industry's average P/S of 0.47.
Finally, we should also recognize that BLDR has a P/CF ratio of 8.91. 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. BLDR's current P/CF looks attractive when compared to its industry's average P/CF of 14.42. Within the past 12 months, BLDR's P/CF has been as high as 9.10 and as low as 4.13, with a median of 5.97.
Value investors will likely look at more than just these metrics, but the above data helps show that Builders FirstSource is likely undervalued currently. And when considering the strength of its earnings outlook, BLDR sticks out at as one of the market's strongest value stocks.
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Builders FirstSource, Inc. (BLDR): 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.