Are Investors Undervaluing Vipshop (VIPS) Right Now?

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.

Considering these trends, value investing is clearly one of the most preferred ways to find strong stocks in any type of market. Value investors use tried-and-true metrics and fundamental analysis to find companies that they believe are undervalued at their current share price levels.

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.

One stock to keep an eye on is Vipshop (VIPS). VIPS is currently holding a Zacks Rank #1 (Strong Buy) and a Value grade of A.

We also note that VIPS holds a PEG ratio of 2.03. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. VIPS's industry currently sports an average PEG of 5.48. Over the last 12 months, VIPS's PEG has been as high as 2.16 and as low as 1.14, with a median of 1.36.

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 0.52. This compares to its industry's average P/S of 0.72.

These are just a handful of the figures considered in Vipshop'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 VIPS is an impressive value stock right now.

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This article originally published on Zacks Investment Research (zacks.com).

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