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 a variety of methods, including tried-and-true valuation metrics, to find these stocks.
Zacks has developed the innovative Style Scores system to highlight stocks with specific traits. For example, value investors will be interested in stocks with great grades in the "Value" category. When paired with a high Zacks Rank, "A" grades in the Value category are among the strongest value stocks on the market today.
Vipshop (VIPS) is a stock many investors are watching right now. VIPS is currently holding a Zacks Rank #2 (Buy) and a Value grade of A. The stock is trading with a P/E ratio of 6.96, which compares to its industry's average of 15.84. Over the past 52 weeks, VIPS's Forward P/E has been as high as 7.28 and as low as 4.92, with a median of 5.91.
Investors should also note that VIPS holds a PEG ratio of 1.61. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. VIPS's PEG compares to its industry's average PEG of 2.22. Over the past 52 weeks, VIPS's PEG has been as high as 2.29 and as low as 1.14, with a median of 1.45.
Investors should also recognize that VIPS has a P/B ratio of 1.64. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. This stock's P/B looks solid versus its industry's average P/B of 4.41. Within the past 52 weeks, VIPS's P/B has been as high as 1.69 and as low as 1.09, with a median of 1.33.
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. VIPS has a P/S ratio of 0.64. This compares to its industry's average P/S of 0.72.
Finally, investors should note that VIPS has a P/CF ratio of 7.96. This metric focuses on a firm's operating cash flow and is often used to find stocks that are undervalued based on the strength of their cash outlook. VIPS's current P/CF looks attractive when compared to its industry's average P/CF of 17.76. VIPS's P/CF has been as high as 8.18 and as low as 5.08, with a median of 6.08, all within the past year.
Value investors will likely look at more than just these metrics, but the above data helps show that Vipshop is likely undervalued currently. And when considering the strength of its earnings outlook, VIPS sticks out as one of the market's strongest value stocks.
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Vipshop Holdings Limited (VIPS): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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