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.
On top of the Zacks Rank, investors can also look at our innovative Style Scores system to find stocks with specific traits. For example, value investors will want to focus on the “Value” category. Stocks with high Zacks Ranks and “A” grades for Value will be some of the highest-quality value stocks on the market today.
Sierra Metals Inc. (SMTS) is a stock many investors are watching right now. SMTS is currently sporting a Zacks Rank of #2 (Buy), as well as an A grade for Value. The stock is trading with P/E ratio of 7.66 right now. For comparison, its industry sports an average P/E of 11.13. Over the past year, SMTS’s Forward P/E has been as high as 12.50 and as low as 2.59, with a median of 7.64.
Investors should also recognize that SMTS has a P/B ratio of 1.99. The P/B ratio is used to compare a stock’s market value with 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 3.36. Within the past 52 weeks, SMTS’s P/B has been as high as 2.69 and as low as 0.50, with a median of 1.17.
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. SMTS has a P/S ratio of 1.83. This compares to its industry’s average P/S of 3.53.
These are just a handful of the figures considered in Sierra Metals Inc.’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 SMTS is an impressive value stock right now.
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