Here at Zacks, our focus is on the proven Zacks Rank system, which emphasizes earnings estimates and estimate revisions to find great stocks. Nevertheless, we are always paying attention to the latest value, growth, and momentum trends to underscore strong picks.
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.
One company to watch right now is The Gap (GAP). GAP is currently sporting a Zacks Rank of #2 (Buy), as well as a Value grade of A. The stock has a Forward P/E ratio of 10.45. This compares to its industry's average Forward P/E of 16.68. Over the past year, GAP's Forward P/E has been as high as 22.71 and as low as 9.98, with a median of 15.85.
Investors should also note that GAP holds a PEG ratio of 1.12. 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. GAP's PEG compares to its industry's average PEG of 1.46. Over the past 52 weeks, GAP's PEG has been as high as 4.60 and as low as 1.07, with a median of 1.42.
Another valuation metric that we should highlight is GAP's P/B ratio of 2.67. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. This stock's P/B looks attractive against its industry's average P/B of 4.58. GAP's P/B has been as high as 4.07 and as low as 1.63, with a median of 2.99, over the past year.
Finally, investors will want to recognize that GAP has a P/CF ratio of 6.21. 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. GAP's P/CF compares to its industry's average P/CF of 13.27. Over the past year, GAP's P/CF has been as high as 14.18 and as low as 5.65, with a median of 7.49.
These are just a handful of the figures considered in The Gap'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 GAP is an impressive value stock right now.
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