Here at Zacks, we focus on our proven ranking system, which places an emphasis on earnings estimates and estimate revisions, to find winning stocks. But we also understand that investors develop their own strategies, so we are constantly looking at the latest trends in value, growth, and momentum to find strong companies for our readers.
Of these, perhaps no stock market trend is more popular than value investing, which is a strategy that has proven to be successful in all sorts of market environments. Value investors use fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.
On top of the Zacks Rank, investors can also look at our innovative Style Scores system to find stocks with specific traits. For example, value investors will want to focus on the "Value" category. Stocks with high Zacks Ranks and "A" grades for Value will be some of the highest-quality value stocks on the market today.
One stock to keep an eye on is Shoe Carnival (SCVL). SCVL is currently holding a Zacks Rank #1 (Strong Buy) and a Value grade of A. The stock is trading with a P/E ratio of 13.37, which compares to its industry's average of 17.45. Over the last 12 months, SCVL's Forward P/E has been as high as 16.40 and as low as 7.18, with a median of 11.63.
Value investors also use the P/S ratio. The P/S ratio is calculated as price divided by sales. This is a preferred metric because revenue can't really be manipulated, so sales are often a truer performance indicator. SCVL has a P/S ratio of 0.45. This compares to its industry's average P/S of 0.47.
Finally, investors should note that SCVL has a P/CF ratio of 6.48. 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. This company's current P/CF looks solid when compared to its industry's average P/CF of 16.66. Within the past 12 months, SCVL's P/CF has been as high as 11.74 and as low as 4.41, with a median of 6.18.
If you're looking for another solid Retail - Apparel and Shoes value stock, take a look at Urban Outfitters (URBN). URBN is a Zacks Rank of #2 (Buy) stock with a Value score of A.
Urban Outfitters is currently trading with a Forward P/E ratio of 13.05 while its PEG ratio sits at 1.07. Both of the company's metrics compare favorably to its industry's average P/E of 17.45 and average PEG ratio of 1.31.
Over the past year, URBN's P/E has been as high as 15.49, as low as 9.10, with a median of 12.80; its PEG ratio has been as high as 1.78, as low as 0.80, with a median of 1.11 during the same time period.
Urban Outfitters sports a P/B ratio of 2.48 as well; this compares to its industry's price-to-book ratio of 6.57. In the past 52 weeks, URBN's P/B has been as high as 2.97, as low as 1.40, with a median of 2.14.
These figures are just a handful of the metrics value investors tend to look at, but they help show that Shoe Carnival and Urban Outfitters are likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, SCVL and URBN feels like a great value stock at the moment.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Shoe Carnival, Inc. (SCVL): Free Stock Analysis Report Urban Outfitters, Inc. (URBN): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
Zacks Investment Research
