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Are Investors Undervaluing Sodexo (SDXAY) Right Now?

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, value investing is easily one of the most popular ways to find great stocks in any market environment. Value investors use a variety of methods, including tried-and-true valuation metrics, to find these stocks.

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 company value investors might notice is Sodexo (SDXAY). SDXAY is currently holding a Zacks Rank of #1 (Strong Buy) and a Value grade of A. The stock is trading with a P/E ratio of 14.70, which compares to its industry's average of 18.08. Over the last 12 months, SDXAY's Forward P/E has been as high as 19.97 and as low as 12.60, with a median of 15.04.

We should also highlight that SDXAY has a P/B ratio of 2.80. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. SDXAY's current P/B looks attractive when compared to its industry's average P/B of 3.99. SDXAY's P/B has been as high as 3.35 and as low as 2.24, with a median of 2.76, over the past year.

If you're looking for another solid Business - Services value stock, take a look at Secom Co. (SOMLY). SOMLY is a # 2 (Buy) stock with a Value score of A.

Additionally, Secom Co. has a P/B ratio of 1.41 while its industry's price-to-book ratio sits at 3.99. For SOMLY, this valuation metric has been as high as 1.65, as low as 1.23, with a median of 1.44 over the past year.

These figures are just a handful of the metrics value investors tend to look at, but they help show that Sodexo and Secom Co. are likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, SDXAY and SOMLY feels like a great value stock at the moment.

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Zacks Investment Research