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.
Considering these trends, value investing is clearly one of the most preferred ways to find strong stocks in any type of market. Value investors use tried-and-true metrics and fundamental analysis to find companies that they believe are undervalued at their current share price levels.
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.
Travel Leisure Co. (TNL) is a stock many investors are watching right now. TNL is currently sporting a Zacks Rank of #1 (Strong Buy), as well as an A grade for Value. The stock holds a P/E ratio of 8.02, while its industry has an average P/E of 19.63. Over the last 12 months, TNL’s Forward P/E has been as high as 8.88 and as low as 6.68, with a median of 7.77.
We also note that TNL holds a PEG ratio of 0.67. 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. TNL’s industry has an average PEG of 0.78 right now. Over the last 12 months, TNL’s PEG has been as high as 2.62 and as low as 0.52, with a median of 0.90.
Value investors also frequently use the P/S ratio. This metric is found by dividing a stock’s price with the company’s revenue. Some people prefer this metric because sales are harder to manipulate on an income statement. This means it could be a truer performance indicator. TNL has a P/S ratio of 0.97. This compares to its industry’s average P/S of 1.24.
Finally, our model also underscores that TNL has a P/CF ratio of 6.98. 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 16.57. Over the past year, TNL’s P/CF has been as high as 7.38 and as low as 5.27, with a median of 6.27.
These figures are just a handful of the metrics value investors tend to look at, but they help show that Travel Leisure Co. Is likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, TNL feels like a great value stock at the moment.
