Are These Retail-Wholesale Stocks Undervalued Right Now?
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.
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 fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.
Luckily, Zacks has developed its own Style Scores system in an effort to find stocks with specific traits. Value investors will be interested in the system's "Value" category. Stocks with both "A" grades in the Value category and high Zacks Ranks are among the strongest value stocks on the market right now.
Tilly's (TLYS) is a stock many investors are watching right now. TLYS is currently sporting a Zacks Rank of #1 (Strong Buy), as well as an A grade for Value. The stock has a Forward P/E ratio of 6.99. This compares to its industry's average Forward P/E of 11.75. Over the past year, TLYS's Forward P/E has been as high as 20.94 and as low as -78.88, with a median of 12.30.
We should also highlight that TLYS has a P/B ratio of 1.92. 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. TLYS's current P/B looks attractive when compared to its industry's average P/B of 3.76. Over the past year, TLYS's P/B has been as high as 3.01 and as low as 1.83, with a median of 2.48.
Value investors also frequently use the P/S ratio. This metric is found by dividing a stock's price with the company's revenue. This is a popular metric because sales are harder to manipulate on an income statement, so they are often considered a better performance indicator. TLYS has a P/S ratio of 0.5. This compares to its industry's average P/S of 0.51.
Another great Retail - Apparel and Shoes stock you could consider is Zumiez (ZUMZ), which is a # 1 (Strong Buy) stock with a Value Score of A.
Zumiez also has a P/B ratio of 1.75 compared to its industry's price-to-book ratio of 3.76. Over the past year, its P/B ratio has been as high as 2.36, as low as 1.63, with a median of 1.99.
These figures are just a handful of the metrics value investors tend to look at, but they help show that Tilly's and Zumiez are likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, TLYS and ZUMZ 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
Tilly's, Inc. (TLYS) : Free Stock Analysis Report
Zumiez Inc. (ZUMZ) : Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment Research
