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.
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.
Luckily, Zacks has developed its own Style Scores system in an effort to find stocks with specific traits. Value investors will be interested in the system's "Value" category. Stocks with both "A" grades in the Value category and high Zacks Ranks are among the strongest value stocks on the market right now.
One company value investors might notice is United Rentals (URI). URI is currently sporting a Zacks Rank of #2 (Buy) and an A for Value. The stock is trading with P/E ratio of 10.20 right now. For comparison, its industry sports an average P/E of 13.26. URI's Forward P/E has been as high as 11.83 and as low as 7.57, with a median of 9.83, all within the past year.
Investors should also note that URI holds a PEG ratio of 0.64. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. URI's PEG compares to its industry's average PEG of 1.05. Within the past year, URI's PEG has been as high as 0.72 and as low as 0.43, with a median of 0.56.
Finally, investors should note that URI has a P/CF ratio of 6.18. 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. This company's current P/CF looks solid when compared to its industry's average P/CF of 16.61. Over the past year, URI's P/CF has been as high as 7.72 and as low as 4.58, with a median of 6.09.
Value investors will likely look at more than just these metrics, but the above data helps show that United Rentals is likely undervalued currently. And when considering the strength of its earnings outlook, URI sticks out at as one of the market's strongest value stocks.
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