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.
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.
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.
One company value investors might notice is Rio Tinto (RIO). RIO is currently sporting a Zacks Rank of #1 (Strong Buy) and an A for Value. The stock is trading with P/E ratio of 9.93 right now. For comparison, its industry sports an average P/E of 10.52. Over the past year, RIO’s Forward P/E has been as high as 12.96 and as low as 7.60, with a median of 10.39.
Investors should also recognize that RIO has a P/B ratio of 1.76. The P/B ratio pits a stock’s market value against its book value, which is defined as total assets minus total liabilities. RIO’s current P/B looks attractive when compared to its industry’s average P/B of 3.36. Over the past year, RIO’s P/B has been as high as 1.85 and as low as 1.02, with a median of 1.52.
These are just a handful of the figures considered in Rio Tinto’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 RIO is an impressive value stock right now.
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