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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, 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 a variety of methods, including tried-and-true valuation metrics, to find these stocks.
Luckily, Zacks has developed its own Style Scores system in an effort to find stocks with specific traits. Value investors will be interested in the system's "Value" category. Stocks with both "A" grades in the Value category and high Zacks Ranks are among the strongest value stocks on the market right now.
Hanger (HNGR) is a stock many investors are watching right now. HNGR is currently sporting a Zacks Rank of #2 (Buy), as well as an A grade for Value. The stock is trading with a P/E ratio of 17.82, which compares to its industry's average of 21.34. Over the last 12 months, HNGR's Forward P/E has been as high as 30.68 and as low as 17.24, with a median of 21.54.
Value investors also use the P/S ratio. The P/S ratio is is calculated as price divided by 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. HNGR has a P/S ratio of 0.53. This compares to its industry's average P/S of 1.03.
Finally, we should also recognize that HNGR has a P/CF ratio of 11.04. 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. HNGR's P/CF compares to its industry's average P/CF of 32.31. Over the past year, HNGR's P/CF has been as high as 19.44 and as low as 8.83, with a median of 11.83.
Value investors will likely look at more than just these metrics, but the above data helps show that Hanger is likely undervalued currently. And when considering the strength of its earnings outlook, HNGR sticks out at as one of the market's strongest value stocks.
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