Here at Zacks, we focus on our proven ranking system, which places an emphasis on earnings estimates and estimate revisions, to find winning stocks. But we also understand that investors develop their own strategies, so we are constantly looking at the latest trends in value, growth, and momentum to find strong companies for our readers.
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.
One company to watch right now is Waddell & Reed Financial (WDR). WDR is currently sporting a Zacks Rank of #2 (Buy), as well as a Value grade of A. The stock holds a P/E ratio of 9.65, while its industry has an average P/E of 12.48. Over the past year, WDR's Forward P/E has been as high as 14.35 and as low as 8.27, with a median of 11.52.
Investors should also recognize that WDR has a P/B ratio of 1.86. 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 solid versus its industry's average P/B of 2.19. WDR's P/B has been as high as 2.24 and as low as 1.65, with a median of 1.87, over the past year.
Finally, our model also underscores that WDR has a P/CF ratio of 9.36. 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. WDR's current P/CF looks attractive when compared to its industry's average P/CF of 17.60. WDR's P/CF has been as high as 12.33 and as low as 8.29, with a median of 9.79, all within the past year.
Value investors will likely look at more than just these metrics, but the above data helps show that Waddell & Reed Financial is likely undervalued currently. And when considering the strength of its earnings outlook, WDR sticks out at as one of the market's strongest value stocks.