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 fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.
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 stock to keep an eye on is Turtle Beach (HEAR). HEAR is currently sporting a Zacks Rank of #2 (Buy) and an A for Value. The stock is trading with a P/E ratio of 19.07, which compares to its industry’s average of 22.53. HEAR’s Forward P/E has been as high as 61.32 and as low as -14,715.47, with a median of 18.78, all within the past year.
We also note that HEAR holds a PEG ratio of 1.19. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company’s expected earnings growth rate. HEAR’s PEG compares to its industry’s average PEG of 1.40. Over the past 52 weeks, HEAR’s PEG has been as high as 1.44 and as low as 1.03, with a median of 1.19.
Investors should also recognize that HEAR has a P/B ratio of 3.64. The P/B ratio pits a stock’s market value against its book value, which is defined as total assets minus total liabilities. This stock’s P/B looks solid versus its industry’s average P/B of 4.37. Over the past 12 months, HEAR’s P/B has been as high as 4.45 and as low as 2.26, with a median of 3.50.
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 popular metric because sales are harder to manipulate on an income statement, so they are often considered a better performance indicator. HEAR has a P/S ratio of 1.01. This compares to its industry’s average P/S of 2.19.
Finally, investors will want to recognize that HEAR has a P/CF ratio of 10.90. This figure highlights a company’s operating cash flow and can be used to find firms that are undervalued when considering their impressive cash outlook. This stock’s P/CF looks attractive against its industry’s average P/CF of 14.49. Over the past 52 weeks, HEAR’s P/CF has been as high as 13.56 and as low as 5.81, with a median of 10.03.
These are just a handful of the figures considered in Turtle Beach’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 HEAR is an impressive value stock right now.
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