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 use tried-and-true metrics and fundamental analysis to find companies that they believe are undervalued at their current share price levels.
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 Textron (TXT). TXT is currently sporting a Zacks Rank of #2 (Buy), as well as an A grade for Value. The stock holds a P/E ratio of 13.67, while its industry has an average P/E of 17.03. Over the past 52 weeks, TXT's Forward P/E has been as high as 20.55 and as low as 12.30, with a median of 18.66.
Investors will also notice that TXT has a PEG ratio of 1.09. 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. TXT's industry has an average PEG of 1.45 right now. TXT's PEG has been as high as 1.98 and as low as 0.79, with a median of 1.68, all within the past year.
Value investors also use the P/S ratio. The P/S ratio is is calculated as price divided by sales. Some people prefer this metric because sales are harder to manipulate on an income statement. This means it could be a truer performance indicator. TXT has a P/S ratio of 0.87. This compares to its industry's average P/S of 0.96.
Finally, investors should note that TXT has a P/CF ratio of 7.47. 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. This company's current P/CF looks solid when compared to its industry's average P/CF of 13.02. TXT's P/CF has been as high as 21.73 and as low as 6.57, with a median of 18.63, all within the past year.
These are just a handful of the figures considered in Textron'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 TXT is an impressive value stock right now.
Textron Inc. (NYSE:TXT): Free Stock Analysis Report
Original post