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 use tried-and-true metrics and fundamental analysis to find companies that they believe are undervalued at their current share price levels.
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 company value investors might notice is Vipshop (VIPS). VIPS 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 6.96, which compares to its industry's average of 12.74. VIPS's Forward P/E has been as high as 7.28 and as low as 4.92, with a median of 5.91, all within the past year.
Investors should also recognize that VIPS has a P/B ratio of 1.64. Investors use the P/B ratio to look at a stock's market value versus 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 3.37. Over the past 12 months, 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 love the P/S ratio, which is calculated by simply dividing a stock's price with the company's 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 0.6. This compares to its industry's average P/S of 0.73.
Finally, we should also recognize 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. This company's current P/CF looks solid when compared to its industry's average P/CF of 13.86. Over the past year, 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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