Is GMS Inc. (GMS) Stock Undervalued Right Now?
While the proven Zacks Rank places an emphasis on earnings estimates and estimate revisions to find strong stocks, we also know that investors tend to develop their own individual strategies. With this in mind, we are always looking at value, growth, and momentum trends to discover great companies.
Of these, value investing is easily one of the most popular ways to find great stocks in any market environment. Value investors use a variety of methods, including tried-and-true valuation metrics, to find these stocks.
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 GMS Inc. (GMS). GMS is currently holding a Zacks Rank of #2 (Buy) and a Value grade of A. The stock is trading with a P/E ratio of 8.95, which compares to its industry's average of 21.97. Over the last 12 months, GMS's Forward P/E has been as high as 11.12 and as low as 3.22, with a median of 8.51.
Investors will also notice that GMS has a PEG ratio of 0.63. 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. GMS's industry has an average PEG of 1.75 right now. Over the past 52 weeks, GMS's PEG has been as high as 1.39 and as low as 0.46, with a median of 1.21.
Value investors also love the P/S ratio, which is calculated by simply dividing a stock's price with the company's 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. GMS has a P/S ratio of 0.34. This compares to its industry's average P/S of 0.61.
Finally, investors should note that GMS has a P/CF ratio of 7.59. This figure highlights a company's operating cash flow and can be used to find firms that are undervalued when considering their impressive cash outlook. This stock's P/CF looks attractive against its industry's average P/CF of 15.41. Within the past 12 months, GMS's P/CF has been as high as 7.82 and as low as 2.27, with a median of 5.99.
These are only a few of the key metrics included in GMS Inc.'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, GMS looks like an impressive value stock at the moment.
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