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.
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.
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.
One company value investors might notice is Minerals Technologies (MTX). MTX is currently sporting a Zacks Rank of #2 (Buy) and an A for Value. The stock is trading with P/E ratio of 10.83 right now. For comparison, its industry sports an average P/E of 21.78. Over the past 52 weeks, MTX's Forward P/E has been as high as 12.26 and as low as 8.56, with a median of 10.51.
Investors should also recognize that MTX has a P/B ratio of 1.28. 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. MTX's current P/B looks attractive when compared to its industry's average P/B of 2.86. Over the past 12 months, MTX's P/B has been as high as 1.46 and as low as 0.98, with a median of 1.17.
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 popular metric because sales are harder to manipulate on an income statement, so they are often considered a better performance indicator. MTX has a P/S ratio of 0.97. This compares to its industry's average P/S of 1.45.
These are only a few of the key metrics included in Minerals Technologies'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, MTX looks like an impressive value stock at the moment.
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