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 tried-and-true metrics and fundamental analysis to find companies that they believe are undervalued at their current share price levels.
Zacks has developed the innovative Style Scores system to highlight stocks with specific traits. For example, value investors will be interested in stocks with great grades in the "Value" category. When paired with a high Zacks Rank, "A" grades in the Value category are among the strongest value stocks on the market today.
One company value investors might notice is Flexsteel Industries (FLXS). FLXS is currently sporting a Zacks Rank of #2 (Buy), as well as an A grade for Value. The stock has a Forward P/E ratio of 8.24. This compares to its industry's average Forward P/E of 14.35. Over the past year, FLXS's Forward P/E has been as high as 12.33 and as low as 6.78, with a median of 8.13.
Value investors also love the P/S ratio, which is calculated by simply dividing a stock's price with the company's sales. This is a prefered metric because revenue can't really be manipulated, so sales are often a truer performance indicator. FLXS has a P/S ratio of 0.19. This compares to its industry's average P/S of 0.38.
If you're looking for another solid Furniture value stock, take a look at Virco Manufacturing (VIRC). VIRC is a # 2 (Buy) stock with a Value score of A.
Virco Manufacturing sports a P/B ratio of 1.22 as well; this compares to its industry's price-to-book ratio of 3.16. In the past 52 weeks, VIRC's P/B has been as high as 1.59, as low as 0.82, with a median of 1.10.
These figures are just a handful of the metrics value investors tend to look at, but they help show that Flexsteel Industries and Virco Manufacturing are likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, FLXS and VIRC feels like a great value stock at the moment.
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