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 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 to watch right now is CSG Systems International (CSGS – Free Report) . CSGS is currently sporting a Zacks Rank of #2 (Buy) and an A for Value. The stock holds a P/E ratio of 12.47, while its industry has an average P/E of 15.94. Over the last 12 months, CSGS’s Forward P/E has been as high as 14.17 and as low as 9.56, with a median of 11.07.
Investors should also note that CSGS holds a PEG ratio of 1.25. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company’s expected EPS growth rate. CSGS’s industry currently sports an average PEG of 1.46. CSGS’s PEG has been as high as 1.42 and as low as 0.96, with a median of 1.11, all within the past year.
Value investors also love the P/S ratio, which is calculated by simply dividing a stock’s price with the company’s sales. This is a prefered metric because revenue can’t really be manipulated, so sales are often a truer performance indicator. CSGS has a P/S ratio of 1.47. This compares to its industry’s average P/S of 2.09.
Finally, our model also underscores that CSGS has a P/CF ratio of 10.71. This metric takes into account a company’s operating cash flow and can be used to find stocks that are undervalued based on their solid cash outlook. CSGS’s current P/CF looks attractive when compared to its industry’s average P/CF of 12.05. CSGS’s P/CF has been as high as 11.94 and as low as 8.36, with a median of 9.93, all within the past year.
Value investors will likely look at more than just these metrics, but the above data helps show that CSG Systems International is likely undervalued currently. And when considering the strength of its earnings outlook, CSGS sticks out at as one of the market’s strongest value stocks.
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