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.
Considering these trends, value investing is clearly one of the most preferred ways to find strong stocks in any type of market. 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 stock to keep an eye on is LPL Financial (LPLA). LPLA is currently sporting a Zacks Rank of #1 (Strong Buy), as well as an A grade for Value.
LPLA is also sporting a PEG ratio of 0.76. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. LPLA's PEG compares to its industry's average PEG of 0.87. Over the last 12 months, LPLA's PEG has been as high as 1.07 and as low as 0.60, with a median of 0.78.
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. LPLA has a P/S ratio of 1.2. This compares to its industry's average P/S of 1.41.
Finally, investors will want to recognize that LPLA has a P/CF ratio of 11.22. This metric takes into account a company's operating cash flow and can be used to find stocks that are undervalued based on their solid cash outlook. This company's current P/CF looks solid when compared to its industry's average P/CF of 19.57. LPLA's P/CF has been as high as 16.67 and as low as 8.90, with a median of 12.60, all within the past year.
These are just a handful of the figures considered in LPL Financial's great Value grade. Still, they help show that the stock is likely being undervalued at the moment. Add this to the strength of its earnings outlook, and we can clearly see that LPLA is an impressive value stock right now.
LPL Financial Holdings Inc. (LPLA): Free Stock Analysis Report
Original post
Zacks Investment Research