Here at Zacks, our focus is on the proven Zacks Rank system, which emphasizes earnings estimates and estimate revisions to find great stocks. Nevertheless, we are always paying attention to the latest value, growth, and momentum trends to underscore strong picks.
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 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.
One company value investors might notice is EZCORP (EZPW). EZPW is currently sporting a Zacks Rank of #2 (Buy), as well as an A grade for Value.
Another notable valuation metric for EZPW is its P/B ratio of 0.89. 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. This stock's P/B looks attractive against its industry's average P/B of 1.13. Over the past 12 months, EZPW's P/B has been as high as 0.96 and as low as 0.66, with a median of 0.77.
Value investors also love the P/S ratio, which is calculated by simply dividing a stock's price with the company's sales. This is a prefered metric because revenue can't really be manipulated, so sales are often a truer performance indicator. EZPW has a P/S ratio of 0.63. This compares to its industry's average P/S of 1.39.
These are just a handful of the figures considered in EZCORP's great Value grade. Still, they help show that the stock is likely being undervalued at the moment. Add this to the strength of its earnings outlook, and we can clearly see that EZPW is an impressive value stock right now.
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This article originally published on Zacks Investment Research (zacks.com).
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