While the proven Zacks Rank places an emphasis on earnings estimates and estimate revisions to find strong stocks, we also know that investors tend to develop their own individual strategies. With this in mind, we are always looking at value, growth, and momentum trends to discover great companies.
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 rely on traditional forms of analysis on key valuation metrics to find stocks that they believe are undervalued, leaving room for profits.
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.
Sally Beauty (SBH) is a stock many investors are watching right now. SBH is currently holding a Zacks Rank #1 (Strong Buy) and a Value grade of A. The stock holds a P/E ratio of 7.34, while its industry has an average P/E of 18.60. Over the past 52 weeks, SBH's Forward P/E has been as high as 8.12 and as low as 4.04, with a median of 5.53.
Value investors also frequently use the P/S ratio. This metric is found by dividing a stock's price with the company's revenue. 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 0.39. This compares to its industry's average P/S of 0.79.
These are just a handful of the figures considered in Sally Beauty's great Value grade. Still, they help show that the stock is likely being undervalued at the moment. Add this to the strength of its earnings outlook, and we can clearly see that SBH is an impressive value stock right now.
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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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