Here at Zacks, our focus is on the proven Zacks Rank system, which emphasizes earnings estimates and estimate revisions to find great stocks. Nevertheless, we are always paying attention to the latest value, growth, and momentum trends to underscore strong picks.
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 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.
Carnival (CCL – Free Report) is a stock many investors are watching right now. CCL is currently sporting a Zacks Rank of #2 (Buy), as well as a Value grade of A. The stock has a Forward P/E ratio of 13.78. This compares to its industry’s average Forward P/E of 19.61. CCL’s Forward P/E has been as high as 20.07 and as low as 10.05, with a median of 13.44, all within the past year.
We should also highlight that CCL has a P/B ratio of 3.04. 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 stock’s P/B looks attractive against its industry’s average P/B of 4.45. Over the past 12 months, CCL’s P/B has been as high as 3.41 and as low as 2.10, with a median of 2.71.
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. CCL has a P/S ratio of 1.11. This compares to its industry’s average P/S of 1.25.
Finally, our model also underscores that CCL has a P/CF ratio of 7.49. 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. CCL’s P/CF compares to its industry’s average P/CF of 16.55. Over the past 52 weeks, CCL’s P/CF has been as high as 9.14 and as low as 5.11, with a median of 6.73.
These figures are just a handful of the metrics value investors tend to look at, but they help show that Carnival is likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, CCL feels like a great value stock at the moment.
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