The proven Zacks Rank system focuses on earnings estimates and estimate revisions to find winning stocks. Nevertheless, we know that our readers all have their own perspectives, so we are always looking at the latest trends in value, growth, and momentum to find strong picks.

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 fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.

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 stock to keep an eye on is Telefonica (TEF). TEF is currently holding a Zacks Rank of #2 (Buy) and a Value grade of A. The stock has a Forward P/E ratio of 13.09. This compares to its industry's average Forward P/E of 16.91. TEF's Forward P/E has been as high as 14.75 and as low as 11.90, with a median of 13.26, all within the past year.

Another notable valuation metric for TEF is its P/B ratio of 0.95. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. TEF's current P/B looks attractive when compared to its industry's average P/B of 2.17. Over the past year, TEF's P/B has been as high as 1.04 and as low as 0.65, with a median of 0.87.

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 prefered metric because revenue can't really be manipulated, so sales are often a truer performance indicator. TEF has a P/S ratio of 0.59. This compares to its industry's average P/S of 1.3.

These figures are just a handful of the metrics value investors tend to look at, but they help show that Telefonica is likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, TEF feels like a great value stock at the moment.

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Telefonica SA (TEF) : Free Stock Analysis Report

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