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While the proven Zacks Rank places an emphasis on earnings estimates and estimate revisions to find strong stocks, we also know that investors tend to develop their own individual strategies. With this in mind, we are always looking at value, growth, and momentum trends to discover great companies.
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 use a variety of methods, including tried-and-true valuation metrics, to find these stocks.
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 to watch right now is Textron (TXT - Free Report) . TXT 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 13.60. This compares to its industry's average Forward P/E of 19.29. Over the last 12 months, TXT's Forward P/E has been as high as 17.68 and as low as 11.81, with a median of 13.99.
TXT is also sporting a PEG ratio of 1.16. 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. TXT's industry currently sports an average PEG of 1.75. Over the last 12 months, TXT's PEG has been as high as 1.40 and as low as 0.98, with a median of 1.15.
Another notable valuation metric for TXT is its P/B ratio of 2.13. 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 stock's P/B looks attractive against its industry's average P/B of 2.93. TXT's P/B has been as high as 2.27 and as low as 1.78, with a median of 2.04, over the past year.
Value investors also use the P/S ratio. The P/S ratio is is calculated as price divided by sales. This is a popular metric because sales are harder to manipulate on an income statement, so they are often considered a better performance indicator. TXT has a P/S ratio of 1.19. This compares to its industry's average P/S of 1.21.
Finally, we should also recognize that TXT has a P/CF ratio of 11.75. This metric takes into account a company's operating cash flow and can be used to find stocks that are undervalued based on their solid cash outlook. This stock's P/CF looks attractive against its industry's average P/CF of 19.03. TXT's P/CF has been as high as 12.70 and as low as 10.05, with a median of 11.62, all within the past year.
These are just a handful of the figures considered in Textron'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 TXT is an impressive value stock right now.
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Is Textron (TXT) a Great Value Stock Right Now?
While the proven Zacks Rank places an emphasis on earnings estimates and estimate revisions to find strong stocks, we also know that investors tend to develop their own individual strategies. With this in mind, we are always looking at value, growth, and momentum trends to discover great companies.
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 use a variety of methods, including tried-and-true valuation metrics, to find these stocks.
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 to watch right now is Textron (TXT - Free Report) . TXT 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 13.60. This compares to its industry's average Forward P/E of 19.29. Over the last 12 months, TXT's Forward P/E has been as high as 17.68 and as low as 11.81, with a median of 13.99.
TXT is also sporting a PEG ratio of 1.16. 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. TXT's industry currently sports an average PEG of 1.75. Over the last 12 months, TXT's PEG has been as high as 1.40 and as low as 0.98, with a median of 1.15.
Another notable valuation metric for TXT is its P/B ratio of 2.13. 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 stock's P/B looks attractive against its industry's average P/B of 2.93. TXT's P/B has been as high as 2.27 and as low as 1.78, with a median of 2.04, over the past year.
Value investors also use the P/S ratio. The P/S ratio is is calculated as price divided by sales. This is a popular metric because sales are harder to manipulate on an income statement, so they are often considered a better performance indicator. TXT has a P/S ratio of 1.19. This compares to its industry's average P/S of 1.21.
Finally, we should also recognize that TXT has a P/CF ratio of 11.75. This metric takes into account a company's operating cash flow and can be used to find stocks that are undervalued based on their solid cash outlook. This stock's P/CF looks attractive against its industry's average P/CF of 19.03. TXT's P/CF has been as high as 12.70 and as low as 10.05, with a median of 11.62, all within the past year.
These are just a handful of the figures considered in Textron'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 TXT is an impressive value stock right now.