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 rely on traditional forms of analysis on key valuation metrics to find stocks that they believe are undervalued, leaving room for profits.
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.
One stock to keep an eye on is Vipshop (VIPS). VIPS is currently sporting a Zacks Rank #2 (Buy), as well as a Value grade of A. The stock holds a P/E ratio of 6.96, while its industry has an average P/E of 15.19. 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.
We also note that VIPS holds a PEG ratio of 1.61. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. VIPS's PEG compares to its industry's average PEG of 2.18. VIPS's PEG has been as high as 2.29 and as low as 1.14, with a median of 1.45, all within the past year.
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. VIPS has a P/S ratio of 0.63. This compares to its industry's average P/S of 0.65.
Finally, investors will want to recognize that VIPS has a P/CF ratio of 7.96. This data point considers a firm's operating cash flow and is frequently used to find companies that are undervalued when considering their solid cash outlook. VIPS's current P/CF looks attractive when compared to its industry's average P/CF of 16.57. Within the past 12 months, VIPS's P/CF has been as high as 8.18 and as low as 5.08, with a median of 6.08.
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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