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, perhaps no stock market trend is more popular than value investing, which is a strategy that has proven to be successful in all sorts of market environments. Value investors use tried-and-true metrics and fundamental analysis to find companies that they believe are undervalued at their current share price levels.
Zacks has developed the innovative Style Scores system to highlight stocks with specific traits. For example, value investors will be interested in stocks with great grades in the "Value" category. When paired with a high Zacks Rank, "A" grades in the Value category are among the strongest value stocks on the market today.
Carter's (CRI) is a stock many investors are watching right now. CRI is currently sporting a Zacks Rank #1 (Strong Buy), as well as an A grade for Value. The stock has a Forward P/E ratio of 11.92. This compares to its industry's average Forward P/E of 21.45. CRI's Forward P/E has been as high as 14.58 and as low as 7.27, with a median of 10.72, all within the past year.
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 preferred metric because revenue can't really be manipulated, so sales are often a truer performance indicator. CRI has a P/S ratio of 0.48. This compares to its industry's average P/S of 0.9.
Value investors will likely look at more than just these metrics, but the above data helps show that Carter's is likely undervalued currently. And when considering the strength of its earnings outlook, CRI 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.
