Is Zumiez (ZUMZ) Stock Undervalued Right Now?

Zacks Equity Research
K12 (LRN) delivered earnings and revenue surprises of 18.92% and 0.23%, respectively, for the quarter ended March 2019. Do the numbers hold clues to what lies ahead for the stock?

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.

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.

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 company to watch right now is Zumiez (ZUMZ). ZUMZ is currently sporting a Zacks Rank of #2 (Buy), as well as an A grade for Value. The stock has a Forward P/E ratio of 12.64. This compares to its industry's average Forward P/E of 14.31. Over the past 52 weeks, ZUMZ's Forward P/E has been as high as 17.53 and as low as 10.10, with a median of 13.84.

Investors should also note that ZUMZ holds a PEG ratio of 1.01. 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. ZUMZ's industry currently sports an average PEG of 1.28. Over the last 12 months, ZUMZ's PEG has been as high as 1.12 and as low as 0.68, with a median of 0.87.

Another notable valuation metric for ZUMZ is its P/B ratio of 1.49. The P/B ratio is used to compare a stock's market value with 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 3.60. Within the past 52 weeks, ZUMZ's P/B has been as high as 2.24 and as low as 1.24, with a median of 1.67.

These are only a few of the key metrics included in Zumiez's strong Value grade, but they help show that the stock is likely undervalued right now. When factoring in the strength of its earnings outlook, ZUMZ looks like an impressive value stock at the moment.


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