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Is Fossil Group (FOSL) a Great Value Stock Right Now?

Zacks Equity Research

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 fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.

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 Fossil Group (FOSL). FOSL is currently sporting a Zacks Rank of #2 (Buy), as well as a Value grade of A. The stock is trading with P/E ratio of 6.51 right now. For comparison, its industry sports an average P/E of 9.60. FOSL's Forward P/E has been as high as 27.61 and as low as 5.86, with a median of 20.29, all within the past year.

We should also highlight that FOSL has a P/B ratio of 1. 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 company's current P/B looks solid when compared to its industry's average P/B of 2.83. Over the past 12 months, FOSL's P/B has been as high as 2.21 and as low as 0.84, with a median of 1.23.

Value investors also use the P/S ratio. The P/S ratio is is calculated as price divided by sales. This is a prefered metric because revenue can't really be manipulated, so sales are often a truer performance indicator. FOSL has a P/S ratio of 0.23. This compares to its industry's average P/S of 0.46.

Finally, investors will want to recognize that FOSL has a P/CF ratio of 5.28. 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. FOSL's current P/CF looks attractive when compared to its industry's average P/CF of 7.37. Within the past 12 months, FOSL's P/CF has been as high as 14.20 and as low as -18.65, with a median of 5.62.

Value investors will likely look at more than just these metrics, but the above data helps show that Fossil Group is likely undervalued currently. And when considering the strength of its earnings outlook, FOSL sticks out at as one of the market's strongest value stocks.


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