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 rely on traditional forms of analysis on key valuation metrics to find stocks that they believe are undervalued, leaving room for profits.
Zacks has developed the innovative Style Scores system to highlight stocks with specific traits. For example, value investors will be interested in stocks with great grades in the “Value” category. When paired with a high Zacks Rank, “A” grades in the Value category are among the strongest value stocks on the market today.
One stock to keep an eye on is Dell Technologies DELL. DELL is currently holding a Zacks Rank of #2 (Buy) and a Value grade of A. The stock is trading with a P/E ratio of 16.08, which compares to its industry's average of 33.91. Over the last 12 months, DELL's Forward P/E has been as high as 21.53 and as low as 8.79, with a median of 10.88.
Investors should also note that DELL holds a PEG ratio of 1.36. 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. DELL's industry currently sports an average PEG of 2.48. Within the past year, DELL's PEG has been as high as 2.27 and as low as 0.73, with a median of 0.91.
Value investors also frequently use the P/S ratio. This metric is found by dividing a stock's price with the company's revenue. This is a popular metric because sales are harder to manipulate on an income statement, so they are often considered a better performance indicator. DELL has a P/S ratio of 1.11. This compares to its industry's average P/S of 1.79.
Finally, we should also recognize that DELL has a P/CF ratio of 14.54. 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 stock's P/CF looks attractive against its industry's average P/CF of 54.08. Over the past 52 weeks, DELL's P/CF has been as high as 18.94 and as low as 7.23, with a median of 9.61.
Value investors will likely look at more than just these metrics, but the above data helps show that Dell Technologies is likely undervalued currently. And when considering the strength of its earnings outlook, DELL sticks out at as one of the market's strongest value stocks.
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