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, 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.
In addition to the Zacks Rank, investors looking for stocks with specific traits can utilize our Style Scores system. Of course, value investors will be most interested in the system's "Value" category. Stocks with "A" grades for Value and high Zacks Ranks are among the best value stocks available at any given moment.
Dollar General (DG) is a stock many investors are watching right now. DG is currently sporting a Zacks Rank #2 (Buy) and an A for Value. The stock holds a P/E ratio of 18.76, while its industry has an average P/E of 32.13. Over the last 12 months, DG's Forward P/E has been as high as 19.69 and as low as 10.58, with a median of 13.56.
DG is also sporting a PEG ratio of 2.65. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. DG's PEG compares to its industry's average PEG of 3.85. DG's PEG has been as high as 2.91 and as low as 1.68, with a median of 2.25, all within the past year.
Value investors also use the P/S ratio. The P/S ratio is calculated as price divided by sales. Some people prefer this metric because sales are harder to manipulate on an income statement. This means it could be a truer performance indicator. DG has a P/S ratio of 0.61. This compares to its industry's average P/S of 0.92.
Finally, investors will want to recognize that DG has a P/CF ratio of 11.61. 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. DG's current P/CF looks attractive when compared to its industry's average P/CF of 30.90. Over the past year, DG's P/CF has been as high as 12.20 and as low as 6.61, with a median of 8.19.
These figures are just a handful of the metrics value investors tend to look at, but they help show that Dollar General is likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, DG feels like a great value stock at the moment.
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Dollar General Corporation (DG): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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