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.
Looking at the history of these trends, perhaps none is more beloved than value investing. This strategy simply looks to identify companies that are being undervalued by the broader 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 Carnival (CCL). CCL is currently holding a Zacks Rank of #2 (Buy) and a Value grade of A. The stock is trading with P/E ratio of 14.14 right now. For comparison, its industry sports an average P/E of 20.19. Over the past year, CCL's Forward P/E has been as high as 20.07 and as low as 10.05, with a median of 13.43.
CCL is also sporting a PEG ratio of 0.78. 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. CCL's industry currently sports an average PEG of 0.82. Within the past year, CCL's PEG has been as high as 0.79 and as low as 0.73, with a median of 0.76.
Another notable valuation metric for CCL is its P/B ratio of 3.19. 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 4.55. Over the past 12 months, CCL's P/B has been as high as 3.41 and as low as 2.10, with a median of 2.72.
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. CCL has a P/S ratio of 1.16. This compares to its industry's average P/S of 1.19.
Finally, investors should note that CCL has a P/CF ratio of 7.87. This data point considers a firm's operating cash flow and is frequently used to find companies that are undervalued when considering their solid cash outlook. CCL's current P/CF looks attractive when compared to its industry's average P/CF of 16.94. CCL's P/CF has been as high as 8.91 and as low as 5.11, with a median of 6.73, all within the past year.
These are only a few of the key metrics included in Carnival's strong Value grade, but they help show that the stock is likely undervalued right now. When factoring in the strength of its earnings outlook, CCL looks like an impressive value stock at the moment.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
