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.
Of these, value investing is easily one of the most popular ways to find great stocks in any market environment. 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 Enersys (ENS – Free Report) . ENS 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 9.32, while its industry has an average P/E of 21.52. Over the past year, ENS’s Forward P/E has been as high as 12.63 and as low as 9.16, with a median of 10.54.
Investors should also recognize that ENS has a P/B ratio of 2.07. Investors use the P/B ratio to look at a stock’s market value versus 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 4.81. ENS’s P/B has been as high as 2.52 and as low as 1.93, with a median of 2.16, over the past year.
Value investors also use the P/S ratio. The P/S ratio is is calculated as price divided by sales. This is a prefered metric because revenue can’t really be manipulated, so sales are often a truer performance indicator. ENS has a P/S ratio of 1.04. This compares to its industry’s average P/S of 2.47.
Value investors will likely look at more than just these metrics, but the above data helps show that Enersys is likely undervalued currently. And when considering the strength of its earnings outlook, ENS sticks out at as one of the market’s strongest value stocks.
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