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.
Looking at the history of these trends, perhaps none is more beloved than value investing. This strategy simply looks to identify companies that are being undervalued by the broader market. Value investors use fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.
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 stock to keep an eye on is Equitable Holdings (EQH – Free Report) . EQH is currently sporting a Zacks Rank of #2 (Buy), as well as an A grade for Value. The stock is trading with a P/E ratio of 6.77, which compares to its industry’s average of 15.82. EQH’s Forward P/E has been as high as 7.84 and as low as 5.26, with a median of 6.15, all within 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. EQH has a P/S ratio of 1.4. This compares to its industry’s average P/S of 1.82.
These figures are just a handful of the metrics value investors tend to look at, but they help show that Equitable Holdings is likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, EQH feels like a great value stock at the moment.
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