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.
Of these, value investing is easily one of the most popular ways to find great stocks in any market environment. Value investors rely on traditional forms of analysis on key valuation metrics to find stocks that they believe are undervalued, leaving room for profits.
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 value investors might notice is Harte Hanks (HHS). HHS 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 5.77. This compares to its industry's average Forward P/E of 11.38. HHS's Forward P/E has been as high as 11.65 and as low as 4.25, with a median of 6.49, all within 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 prefered metric because revenue can't really be manipulated, so sales are often a truer performance indicator. HHS has a P/S ratio of 0.35. This compares to its industry's average P/S of 0.76.
Finally, we should also recognize that HHS has a P/CF ratio of 3.98. 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. HHS's current P/CF looks attractive when compared to its industry's average P/CF of 10.56. Over the past year, HHS's P/CF has been as high as 7.98 and as low as 2.38, with a median of 3.37.
These are only a few of the key metrics included in Harte Hanks'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, HHS looks like an impressive value stock at the moment.
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