Here at Zacks, our focus is on the proven Zacks Rank system, which emphasizes earnings estimates and estimate revisions to find great stocks. Nevertheless, we are always paying attention to the latest value, growth, and momentum trends to underscore strong picks.
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 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.
Tronox (TROX) is a stock many investors are watching right now. TROX 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 6.38, which compares to its industry's average of 11.77. Over the last 12 months, TROX's Forward P/E has been as high as 14.75 and as low as 5.03, with a median of 9.20.
Another valuation metric that we should highlight is TROX's P/B ratio of 1.54. The P/B ratio is used to compare a stock's market value with 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 2.14. Over the past year, TROX's P/B has been as high as 2.02 and as low as 1.21, with a median of 1.74.
Value investors also frequently use the P/S ratio. This metric is found by dividing a stock's price with the company's revenue. This is a prefered metric because revenue can't really be manipulated, so sales are often a truer performance indicator. TROX has a P/S ratio of 0.87. This compares to its industry's average P/S of 0.94.
Finally, investors should note that TROX has a P/CF ratio of 5.50. 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 6.25. Within the past 12 months, TROX's P/CF has been as high as 7.31 and as low as 1.83, with a median of 2.86.
These are only a few of the key metrics included in Tronox'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, TROX looks like an impressive value stock at the moment.
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