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 a variety of methods, including tried-and-true valuation metrics, to find these stocks.
Luckily, Zacks has developed its own Style Scores system in an effort to find stocks with specific traits. Value investors will be interested in the system's "Value" category. Stocks with both "A" grades in the Value category and high Zacks Ranks are among the strongest value stocks on the market right now.
Science Applications International (SAIC) is a stock many investors are watching right now. SAIC is currently sporting a Zacks Rank of #2 (Buy) and an A for Value. The stock is trading with P/E ratio of 16.32 right now. For comparison, its industry sports an average P/E of 38.70. Over the past year, SAIC's Forward P/E has been as high as 17.94 and as low as 13.35, with a median of 15.40.
Value investors also use the P/S ratio. The P/S ratio is is calculated as price divided by sales. This is a prefered metric because revenue can't really be manipulated, so sales are often a truer performance indicator. SAIC has a P/S ratio of 0.97. This compares to its industry's average P/S of 2.08.
These figures are just a handful of the metrics value investors tend to look at, but they help show that Science Applications International is likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, SAIC feels like a great value stock at the moment.
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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.
