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 fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.
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.
The Mosaic Company (MOS) is a stock many investors are watching right now. MOS 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 12.51. This compares to its industry's average Forward P/E of 14.53. Over the past 52 weeks, MOS's Forward P/E has been as high as 14.13 and as low as 9.33, with a median of 11.92.
We also note that MOS holds a PEG ratio of 1.47. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. MOS's PEG compares to its industry's average PEG of 2.38. Over the past 52 weeks, MOS's PEG has been as high as 2.02 and as low as 1.31, with a median of 1.70.
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. MOS has a P/S ratio of 0.75. This compares to its industry's average P/S of 1.26.
Finally, investors will want to recognize that MOS has a P/CF ratio of 5.77. 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. MOS's P/CF compares to its industry's average P/CF of 19.76. Over the past year, MOS's P/CF has been as high as 7.28 and as low as 4.35, with a median of 5.49.
Value investors will likely look at more than just these metrics, but the above data helps show that The Mosaic Company is likely undervalued currently. And when considering the strength of its earnings outlook, MOS sticks out at as one of the market's strongest value stocks.
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