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, value investing is easily one of the most popular ways to find great stocks in any market environment. Value investors use tried-and-true metrics and fundamental analysis to find companies that they believe are undervalued at their current share price levels.
On top of the Zacks Rank, investors can also look at our innovative Style Scores system to find stocks with specific traits. For example, value investors will want to focus on the “Value” category. Stocks with high Zacks Ranks and “A” grades for Value will be some of the highest-quality value stocks on the market today.
One stock to keep an eye on is LKQ (LKQ – Free Report) . LKQ is currently sporting a Zacks Rank of #2 (Buy) and an A for Value. The stock holds a P/E ratio of 14.24, while its industry has an average P/E of 14.26. Over the last 12 months, LKQ’s Forward P/E has been as high as 16.88 and as low as 12.70, with a median of 14.53.
Investors should also recognize that LKQ has a P/B ratio of 2.80. The P/B is a method of comparing a stock’s market value to its book value, which is defined as total assets minus total liabilities. LKQ’s current P/B looks attractive when compared to its industry’s average P/B of 2.92. LKQ’s P/B has been as high as 2.94 and as low as 1.86, with a median of 2.52, over the past year.
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. LKQ has a P/S ratio of 1.3. This compares to its industry’s average P/S of 1.44.
Finally, we should also recognize that LKQ has a P/CF ratio of 12.63. 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. This stock’s P/CF looks attractive against its industry’s average P/CF of 16.06. Over the past year, LKQ’s P/CF has been as high as 14.67 and as low as 11.07, with a median of 12.54.
These are just a handful of the figures considered in LKQ’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 LKQ is an impressive value stock right now.