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 rely on traditional forms of analysis on key valuation metrics to find stocks that they believe are undervalued, leaving room for profits.
In addition to the Zacks Rank, investors looking for stocks with specific traits can utilize our Style Scores system. Of course, value investors will be most interested in the system’s “Value” category. Stocks with “A” grades for Value and high Zacks Ranks are among the best value stocks available at any given moment.
One stock to keep an eye on is PattersonUTI Energy (PTEN – Free Report) . PTEN is currently sporting a Zacks Rank of #2 (Buy), as well as a Value grade of A.
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 popular metric because sales are harder to manipulate on an income statement, so they are often considered a better performance indicator. PTEN has a P/S ratio of 0.61. This compares to its industry’s average P/S of 0.92.
Finally, investors should note that PTEN has a P/CF ratio of 3.03. 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. PTEN’s P/CF compares to its industry’s average P/CF of 9.79. Over the past 52 weeks, PTEN’s P/CF has been as high as 5.16 and as low as 2.32, with a median of 3.10.
These are just a handful of the figures considered in PattersonUTI Energy’s great Value grade. Still, they help show that the stock is likely being undervalued at the moment. Add this to the strength of its earnings outlook, and we can clearly see that PTEN is an impressive value stock right now.
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