The proven Zacks Rank system focuses on earnings estimates and estimate revisions to find winning stocks. Nevertheless, we know that our readers all have their own perspectives, so we are always looking at the latest trends in value, growth, and momentum to find strong picks.
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.
Luckily, Zacks has developed its own Style Scores system in an effort to find stocks with specific traits. Value investors will be interested in the system’s “Value” category. Stocks with both “A” grades in the Value category and high Zacks Ranks are among the strongest value stocks on the market right now.
One company to watch right now is Tactile Systems Technology (TCMD – Free Report) . TCMD 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 19.99 right now. For comparison, its industry sports an average P/E of 35.55. Over the last 12 months, TCMD’s Forward P/E has been as high as 34.63 and as low as 13.86, with a median of 19.22.
Another valuation metric that we should highlight is TCMD’s P/B ratio of 1.97. The P/B is a method of comparing a stock’s market value to 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 4.05. TCMD’s P/B has been as high as 2.23 and as low as 1.34, with a median of 1.69, 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. TCMD has a P/S ratio of 1.44. This compares to its industry’s average P/S of 2.77.
Finally, investors will want to recognize that TCMD has a P/CF ratio of 18.87. This figure highlights a company’s operating cash flow and can be used to find firms that are undervalued when considering their impressive cash outlook. TCMD’s current P/CF looks attractive when compared to its industry’s average P/CF of 22.93. Over the past year, TCMD’s P/CF has been as high as 21.40 and as low as 6.94, with a median of 9.77.
These are only a few of the key metrics included in Tactile Systems Technology’s strong Value grade, but they help show that the stock is likely undervalued right now. When factoring in the strength of its earnings outlook, TCMD looks like an impressive value stock at the moment.
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