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 rely on traditional forms of analysis on key valuation metrics to find stocks that they believe are undervalued, leaving room for profits.
On top of the Zacks Rank, investors can also look at our innovative Style Scores system to find stocks with specific traits. For example, value investors will want to focus on the "Value" category. Stocks with high Zacks Ranks and "A" grades for Value will be some of the highest-quality value stocks on the market today.
One stock to keep an eye on is Baidu (BIDU). BIDU is currently sporting a Zacks Rank of #1 (Strong Buy), as well as an A grade for Value. The stock has a Forward P/E ratio of 9.90. This compares to its industry's average Forward P/E of 18.62. Over the past year, BIDU's Forward P/E has been as high as 10.35 and as low as 6.86, with a median of 8.17.
Finally, investors should note that BIDU has a P/CF ratio of 5.40. 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. BIDU's current P/CF looks attractive when compared to its industry's average P/CF of 14.70. BIDU's P/CF has been as high as 6.89 and as low as 4.25, with a median of 5.29, all within the past year.
These are only a few of the key metrics included in Baidu'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, BIDU looks like an impressive value stock at the moment.
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This article originally published on Zacks Investment Research (zacks.com).
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