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.
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.
XP (XP) is a stock many investors are watching right now. XP is currently sporting a Zacks Rank of #1 (Strong Buy), as well as an A grade for Value. The stock is trading with P/E ratio of 9.30 right now. For comparison, its industry sports an average P/E of 14.20. XP's Forward P/E has been as high as 13 and as low as 1.97, with a median of 9.96, all within the past year.
Investors should also note that XP holds a PEG ratio of 0.66. 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. XP's industry has an average PEG of 0.92 right now. XP's PEG has been as high as 0.95 and as low as 0.16, with a median of 0.73, all within the past year.
Investors should also recognize that XP has a P/B ratio of 2.29. Investors use the P/B ratio to look at a stock's market value versus 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 2.57. XP's P/B has been as high as 3.62 and as low as 1.63, with a median of 2.51, over the past year.
Finally, investors will want to recognize that XP has a P/CF ratio of 9.38. 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 15.46. Over the past year, XP's P/CF has been as high as 16.90 and as low as 6.71, with a median of 10.84.
These figures are just a handful of the metrics value investors tend to look at, but they help show that XP is likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, XP feels like a great value stock at the moment.
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This article originally published on Zacks Investment Research (zacks.com).
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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