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.
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 company value investors might notice is Bayerische Motoren Werke (BAMXF). BAMXF is currently sporting a Zacks Rank of #2 (Buy), as well as an A grade for Value. The stock is trading with P/E ratio of 6.33 right now. For comparison, its industry sports an average P/E of 7.74. Over the past year, BAMXF's Forward P/E has been as high as 7.06 and as low as 3.09, with a median of 5.24.
We should also highlight that BAMXF has a P/B ratio of 0.66. 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 company's current P/B looks solid when compared to its industry's average P/B of 0.90. BAMXF's P/B has been as high as 0.69 and as low as 0.43, with a median of 0.51, over the past year.
Value investors also frequently use the P/S ratio. This metric is found by dividing a stock's price with the company's revenue. Some people prefer this metric because sales are harder to manipulate on an income statement. This means it could be a truer performance indicator. BAMXF has a P/S ratio of 0.43. This compares to its industry's average P/S of 0.5.
Finally, we should also recognize that BAMXF has a P/CF ratio of 2.37. This metric focuses on a firm's operating cash flow and is often used to find stocks that are undervalued based on the strength of their cash outlook. This company's current P/CF looks solid when compared to its industry's average P/CF of 4.81. Within the past 12 months, BAMXF's P/CF has been as high as 2.67 and as low as 1.57, with a median of 1.86.
Value investors will likely look at more than just these metrics, but the above data helps show that Bayerische Motoren Werke is likely undervalued currently. And when considering the strength of its earnings outlook, BAMXF sticks out at as one of the market's strongest value stocks.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report