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.
Considering these trends, value investing is clearly one of the most preferred ways to find strong stocks in any type of 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.
Skechers (SKX) is a stock many investors are watching right now. SKX is currently sporting a Zacks Rank #2 (Buy), as well as a Value grade of A. The stock holds a P/E ratio of 16.37, while its industry has an average P/E of 30.45. Over the past year, SKX's Forward P/E has been as high as 16.93 and as low as 9.83, with a median of 14.37.
SKX is also sporting a PEG ratio of 0.78. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. SKX's PEG compares to its industry's average PEG of 1.78. Within the past year, SKX's PEG has been as high as 1.11 and as low as 0.69, with a median of 0.84.
Finally, investors will want to recognize that SKX has a P/CF ratio of 10.78. This data point considers a firm's operating cash flow and is frequently used to find companies that are undervalued when considering their solid cash outlook. This stock's P/CF looks attractive against its industry's average P/CF of 26.33. SKX's P/CF has been as high as 14.00 and as low as 8.06, with a median of 11.28, all within the past year.
Value investors will likely look at more than just these metrics, but the above data helps show that Skechers is likely undervalued currently. And when considering the strength of its earnings outlook, SKX 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.
