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.
Of these, perhaps no stock market trend is more popular than value investing, which is a strategy that has proven to be successful in all sorts of market environments. 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 company to watch right now is Dana (DAN). DAN is currently sporting a Zacks Rank #2 (Buy), as well as an A grade for Value. The stock is trading with a P/E ratio of 11.02, which compares to its industry’s average of 21.71. Over the last 12 months, DAN’s Forward P/E has been as high as 13.55 and as low as 5.44, with a median of 8.40.
DAN is also sporting a PEG ratio of 1.06. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company’s expected earnings growth rate. DAN’s PEG compares to its industry’s average PEG of 1.52. Over the past 52 weeks, DAN’s PEG has been as high as 1.10 and as low as 0.31, with a median of 0.51.
Another notable valuation metric for DAN is its P/B ratio of 1.74. The P/B ratio pits a stock’s market value against 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 3.65. DAN’s P/B has been as high as 1.80 and as low as 0.72, with a median of 1.18, over the past year.
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. DAN has a P/S ratio of 0.25. This compares to its industry’s average P/S of 0.66.
Value investors will likely look at more than just these metrics, but the above data helps show that Dana is likely undervalued currently. And when considering the strength of its earnings outlook, DAN sticks out as one of the market’s strongest value stocks.