Here at Zacks, we focus on our proven ranking system, which places an emphasis on earnings estimates and estimate revisions, to find winning stocks. But we also understand that investors develop their own strategies, so we are constantly looking at the latest trends in value, growth, and momentum to find strong companies for our readers.
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 fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.
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 Seagate (STX). STX is currently sporting a Zacks Rank of #2 (Buy), as well as an A grade for Value. The stock holds a P/E ratio of 10.59, while its industry has an average P/E of 18.29. Over the past year, STX's Forward P/E has been as high as 12.66 and as low as 8.75, with a median of 10.36.
Finally, we should also recognize that STX has a P/CF ratio of 6.59. 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. This company's current P/CF looks solid when compared to its industry's average P/CF of 14.34. Over the past year, STX's P/CF has been as high as 7.55 and as low as 4.84, with a median of 6.31.
Value investors will likely look at more than just these metrics, but the above data helps show that Seagate is likely undervalued currently. And when considering the strength of its earnings outlook, STX sticks out at as one of the market's strongest value stocks.
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