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, value investing is easily one of the most popular ways to find great stocks in any market environment. Value investors use fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.
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.
One company value investors might notice is PG&E (PCG). PCG is currently sporting a Zacks Rank of #2 (Buy), as well as a Value grade of A. The stock is trading with P/E ratio of 10.63 right now. For comparison, its industry sports an average P/E of 14.29. Over the last 12 months, PCG's Forward P/E has been as high as 14.79 and as low as 10.63, with a median of 12.89.
We also note that PCG holds a PEG ratio of 1.11. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. PCG's PEG compares to its industry's average PEG of 1.78. Over the last 12 months, PCG's PEG has been as high as 5.02 and as low as 1.11, with a median of 1.47.
Another notable valuation metric for PCG is its P/B ratio of 1.54. 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 2.38. Within the past 52 weeks, PCG's P/B has been as high as 2.10 and as low as 1.54, with a median of 1.90.
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. PCG has a P/S ratio of 1.66. This compares to its industry's average P/S of 1.96.
Finally, our model also underscores that PCG has a P/CF ratio of 5.07. 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. PCG's P/CF compares to its industry's average P/CF of 11.33. PCG's P/CF has been as high as 7.04 and as low as 5.07, with a median of 6.24, all within the past year.
These are just a handful of the figures considered in PG&E's great Value grade. Still, they help show that the stock is likely being undervalued at the moment. Add this to the strength of its earnings outlook, and we can clearly see that PCG is an impressive value stock right now.
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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.
