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.
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 Matador Resources (MTDR – Free Report) . MTDR is currently holding a Zacks Rank of #2 (Buy) and a Value grade of A. The stock is trading with P/E ratio of 5.43 right now. For comparison, its industry sports an average P/E of 10.36. Over the past 52 weeks, MTDR’s Forward P/E has been as high as 9.96 and as low as 5.21, with a median of 7.04.
Value investors also use the P/S ratio. The P/S ratio is is calculated as price divided by sales. This is a prefered metric because revenue can’t really be manipulated, so sales are often a truer performance indicator. MTDR has a P/S ratio of 1.74. This compares to its industry’s average P/S of 1.99.
Finally, our model also underscores that MTDR has a P/CF ratio of 3.14. 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. This company’s current P/CF looks solid when compared to its industry’s average P/CF of 11.82. Over the past 52 weeks, MTDR’s P/CF has been as high as 5.25 and as low as 2.99, with a median of 3.99.
These figures are just a handful of the metrics value investors tend to look at, but they help show that Matador Resources is likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, MTDR feels like a great value stock at the moment.
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