Here at Zacks, our focus is on the proven Zacks Rank system, which emphasizes earnings estimates and estimate revisions to find great stocks. Nevertheless, we are always paying attention to the latest value, growth, and momentum trends to underscore strong picks.
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 tried-and-true metrics and fundamental analysis to find companies that they believe are undervalued at their current share price levels.
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.
International Game Technology (IGT) is a stock many investors are watching right now. IGT is currently sporting a Zacks Rank of #1 (Strong Buy), as well as an A grade for Value.
Another valuation metric that we should highlight is IGT’s P/B ratio of 2.22. The P/B is a method of comparing a stock’s market value to its book value, which is defined as total assets minus total liabilities. This company’s current P/B looks solid when compared to its industry’s average P/B of 5.58. Within the past 52 weeks, IGT’s P/B has been as high as 3.27 and as low as 1.71, with a median of 2.42.
Value investors also love the P/S ratio, which is calculated by simply dividing a stock’s price with the company’s sales. Some people prefer this metric because sales are harder to manipulate on an income statement. This means it could be a truer performance indicator. IGT has a P/S ratio of 1.19. This compares to its industry’s average P/S of 1.42.
Finally, investors will want to recognize that IGT has a P/CF ratio of 6.04. 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. This stock’s P/CF looks attractive against its industry’s average P/CF of 12.04. Within the past 12 months, IGT’s P/CF has been as high as 10.73 and as low as 3.69, with a median of 5.45.
PENN Entertainment, Inc. (PENN) may be another strong Gaming stock to add to your shortlist. PENN is a # 2 (Buy) stock with a Value grade of A.
PENN Entertainment, Inc. is currently trading with a Forward P/E ratio of 19.61 while its PEG ratio sits at 1.44. Both of the company’s metrics compare favorably to its industry’s average P/E of 1,479.19 and average PEG ratio of 54.31.
PENN’s Forward P/E has been as high as 26.99 and as low as 13.70, with a median of 19.13. During the same time period, its PEG ratio has been as high as 19.28, as low as 1.14, with a median of 3.01.
Furthermore, PENN Entertainment, Inc. holds a P/B ratio of 1.45 and its industry’s price-to-book ratio is 5.58. PENN’s P/B has been as high as 3.44, as low as 1.11, with a median of 1.55 over the past 12 months.
These are just a handful of the figures considered in International Game Technology and PENN Entertainment, 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 IGT and PENN is an impressive value stock right now.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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