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.
Looking at the history of these trends, perhaps none is more beloved than value investing. This strategy simply looks to identify companies that are being undervalued by the broader 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.
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.
Sally Beauty (SBH) is a stock many investors are watching right now. SBH is currently sporting a Zacks Rank #2 (Buy), as well as an A grade for Value. The stock is trading with a P/E ratio of 7.02, which compares to its industry's average of 19.38. SBH's Forward P/E has been as high as 8.12 and as low as 4.04, with a median of 5.53, all within the past year.
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. SBH has a P/S ratio of 0.36. This compares to its industry's average P/S of 0.85.
These figures are just a handful of the metrics value investors tend to look at, but they help show that Sally Beauty is likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, SBH feels like a great value stock at the moment.
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Sally Beauty Holdings, Inc. (SBH): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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