Are Investors Undervaluing ADT (ADT) Right Now?

The proven Zacks Rank system focuses on earnings estimates and estimate revisions to find winning stocks. Nevertheless, we know that our readers all have their own perspectives, so we are always looking at the latest trends in value, growth, and momentum to find 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 fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.

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.

One stock to keep an eye on is ADT (ADT). ADT is currently sporting a Zacks Rank #2 (Buy), as well as a Value grade of A. The stock is trading with a P/E ratio of 9.49, which compares to its industry's average of 16.96. Over the past 52 weeks, ADT's Forward P/E has been as high as 10.52 and as low as 8.31, with a median of 9.41.

Another notable valuation metric for ADT is its P/B ratio of 1.95. 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 stock's P/B looks attractive against its industry's average P/B of 5.64. Within the past 52 weeks, ADT's P/B has been as high as 2.01 and as low as 1.56, with a median of 1.82.

Value investors also love the P/S ratio, which is calculated by simply dividing a stock's price with the company's sales. This is a preferred metric because revenue can't really be manipulated, so sales are often a truer performance indicator. ADT has a P/S ratio of 1.27. This compares to its industry's average P/S of 1.83.

These are only a few of the key metrics included in ADT's strong Value grade, but they help show that the stock is likely undervalued right now. When factoring in the strength of its earnings outlook, ADT looks like an impressive value stock at the moment.

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This article originally published on Zacks Investment Research (zacks.com).

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