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Is Genesco (GCO) Stock Undervalued 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.

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.

Genesco (GCO) is a stock many investors are watching right now. GCO is currently holding a Zacks Rank of #1 (Strong Buy) and a Value grade of A. The stock is trading with a P/E ratio of 10.43, which compares to its industry's average of 12.16. Over the past 52 weeks, GCO's Forward P/E has been as high as 14.22 and as low as 8.16, with a median of 11.23.

We should also highlight that GCO has a P/B ratio of 1.27. The P/B is a method of comparing a stock's market value to 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 3.35. Over the past year, GCO's P/B has been as high as 1.34 and as low as 0.83, with a median of 1.12.

Value investors also love the P/S ratio, which is calculated by simply dividing a stock's price with the company's sales. This is a popular metric because sales are harder to manipulate on an income statement, so they are often considered a better performance indicator. GCO has a P/S ratio of 0.33. This compares to its industry's average P/S of 0.51.

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


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