OWhile Zacks’ proven rankings emphasize earnings estimates and revisions to estimates to find strong stocks, we also know that investors tend to develop their own individual strategies. With that in mind, we always look at value, growth and momentum trends to uncover great companies.
Looking at the history of these trends, perhaps none is more popular than value investing. This strategy simply aims to identify companies that are undervalued by the broader market. Value investors use a variety of methods, including proven valuation metrics, to find these stocks.
In addition to the Zacks Ranking, investors looking for stocks with specific characteristics can use our Style Scores system. Of course, value investors will be more interested in the “Value” category of the system. Stocks with “A” ratings for value and high Zacks ranks are some of the best value stocks available at any time.
One business value that investors might notice is Lloyds Banking Group (LYG). LYG currently holds a Zacks rank of No. 2 (buy) and a value rating of A. The stock has a forward P/E ratio of 7.95. This compares to its industry average Forward P/E of 9.58. LYG’s Forward P/E has been as high as 10.78 and as low as 6.08, with a median of 7.90, all over the past year.
Investors should also note that LYG holds a PEG ratio of 0.26. This measure is used in the same way as the famous P/E ratio, but the PEG ratio also takes into account the growth rate of the stock’s expected earnings. LYG’s PEG compares to its industry average PEG of 0.49. Over the past 12 months, LYG’s PEG has been as high as 0.39 and as low as 0.20, with a median of 0.25.
Another valuation metric we should highlight is LYG’s P/B ratio of 0.64. P/B is a method of comparing the market value of a stock to its book value, which is defined as total assets minus total liabilities. The stock’s P/B looks attractive compared to its sector average P/B of 1.40. LYG’s P/B has been as high as 0.73 and as low as 0.56, with a median of 0.63, over the past year.
Value investors also use the P/S ratio. The P/S ratio is calculated as price divided by sales. This is a popular metric because sales are harder to manipulate on an income statement, so it’s often seen as a better performance indicator. LYG has a P/S ratio of 1.47. This compares to its industry average P/S of 1.63.
These are just some of the key indicators included in Lloyds Banking Group’s strong value rating, but they help show that the stock is likely undervalued at the moment. Considering its strong earnings outlook, LYG looks like an impressive value stock at the moment.
Zacks names ‘only one best choice for doubling up’
From thousands of stocks, 5 Zacks experts have each picked their favorite to skyrocket by +100% or more in the coming months. Of these 5, Research Director Sheraz Mian selects one to have the most explosive advantage of all.
It’s a little-known chemical company that’s up 65% year-on-year, but still very cheap. With relentless demand, rising earnings estimates for 2022 and $1.5 billion for stock buybacks, retail investors could step in at any time.
This company could rival or surpass other recent Zacks stocks which are expected to double, such as Boston Beer Company which jumped +143.0% in just over 9 months and NVIDIA which jumped +175.9% in one. year.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.