Maximizing benefits from the stock market and investing with assurance are typical objectives for both new and experienced investors, and Zacks Premium provides various methods to achieve these goals.
Including daily updates on the Zacks Rank and Zacks Industry Rank, complete access to the Zacks #1 Rank List, Equity Research reports, and advanced stock screening tools, this research service can assist you in becoming a more knowledgeable and confident investor.
Zacks Premium also features the Zacks Style Scores.
What are the Zacks Style Ratings?
Created in conjunction with the Zacks Rank, the Zacks Style Scores are a set of additional metrics designed to assist investors in selecting stocks that have the highest potential to outperform the market within the next 30 days.
Stocks are given a rating of A, B, C, D, or F based on their value, growth, and momentum factors. The higher the rating, the greater the likelihood that the stock will perform well; an A is superior to a B, which is better than a C, and so forth.
The Style Ratings are categorized into four sections:
Value Score
Value investors focus on identifying strong stocks that are available at favorable prices, aiming to find companies that are being sold below their actual worth before the general market recognizes this opportunity. The Value Style Score employs metrics such as P/E, PEG, Price/Sales, Price/Cash Flow, and various other multiples to identify the most appealing and undervalued stocks.
Growth Score
Investment managers who focus on growth are more interested in a stock's potential for future development and the general financial stability of the company. Therefore, the Growth Style Score evaluates factors such as expected and past earnings, revenue, and cash flow to identify stocks that are likely to experience consistent growth in the long run.
Momentum Score
Traders and investors who follow momentum strategies often rely on the belief that "the trend is your friend." This approach focuses on capitalizing on rising or falling trends in a stock's price or earnings expectations. By considering elements such as the price movement over one week and the monthly change in earnings forecasts, the Momentum Style Score can help identify opportune moments to enter positions in stocks with strong momentum.
VGM Score
What if you want to utilize all three types of investing? The VGM Score combines all Style Scores, making it one of the most thorough metrics to use alongside the Zacks Rank. It evaluates each stock based on their weighted styles, helping identify companies that offer the best value, strongest growth potential, and most encouraging momentum.
How Zacks Rank Determines Style Scores
A unique stock-rating system, the Zacks Rank leverages the impact of changes in a company's earnings projections to assist investors in building a profitable portfolio.
#1 (Strong Buy) stocks have delivered an exceptional average annual return of +23.81% since 1988, outperforming the S&P 500 by more than double during the same period. Nevertheless, the Zacks Rank evaluates a large number of stocks, with over 200 companies holding a Strong Buy rating and approximately 600 others having a #2 (Buy) rating on any given day.
However, selecting the appropriate stocks for you and your investment objectives can seem daunting when there are more than 800 highly-rated stocks available.
That's where Style Ratings are applied.
To maximize the potential for significant gains, you should consistently look at stocks rated #1 or #2 on the Zacks Rank, along with Style Scores of A or B, as this combination offers the greatest likelihood of success. If you're evaluating stocks with a #3 (Hold) rating, it's still crucial they have A or B Style Scores to maximize possible upward movement.
As noted earlier, the Scores are intended to complement the Zacks Rank, meaning any adjustment in a company's earnings expectations should be a key consideration when selecting stocks to purchase.
Here's an example: a stock rated #4 (Sell) or #5 (Strong Sell), even if it has Style Scores of A and B, still shows a declining earnings trend, and is more likely to experience a drop in its stock price.
Therefore, the more stocks you hold that have a #1 or #2 Ranking and Grades of A or B, the better.
Stock to Monitor: Acuity (AYI)
Based in Atlanta, GA, Acuity, Inc. serves as the parent organization for Acuity Brands Lighting, Inc. and several other affiliated companies. The business produces and distributes lighting equipment and associated parts, including items like light fixtures, illumination controls, and controllers for different building systems, power sources, prismatic skylights, and drivers, along with combined systems aimed at enhancing energy efficiency and comfort for both indoor and outdoor uses.
AYI is ranked #1 (Strong Buy) on the Zacks Rank, and has a VGM Score of B.
It also features a Value Style Score of B due to appealing valuation measures such as a forward P/E ratio of 18.52; value investors would be wise to pay attention.
In fiscal year 2026, four analysts have raised their earnings forecasts within the past 60 days, leading the Zacks Consensus Estimate to rise by $0.74 to $19.76 per share. AYI has an average earnings surprise of +7.6%.
Having a strong Zacks Rank along with high Value and VGM Style Scores, AYI is worth considering for investors.
This piece was first released on Zacks Investment Research (Healthy urvival).