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Are Investors Undervaluing Capri Holdings (CPRI) Right Now?

Zacks Equity Research
Applied Materials (AMAT) reported earnings 30 days ago. What's next for the stock? We take a look at earnings estimates for some clues.

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, perhaps no stock market trend is more popular than value investing, which is a strategy that has proven to be successful in all sorts of market environments. Value investors rely on traditional forms of analysis on key valuation metrics to find stocks that they believe are undervalued, leaving room for profits.

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 Capri Holdings (CPRI). CPRI is currently holding a Zacks Rank of #2 (Buy) and a Value grade of A. The stock holds a P/E ratio of 8.67, while its industry has an average P/E of 14.57. CPRI's Forward P/E has been as high as 14.81 and as low as 7.10, with a median of 10.83, all within the past year.

Investors will also notice that CPRI has a PEG ratio of 1.32. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. CPRI's industry currently sports an average PEG of 1.41. Over the past 52 weeks, CPRI's PEG has been as high as 2.20 and as low as 1.14, with a median of 1.70.

Another valuation metric that we should highlight is CPRI's P/B ratio of 2.91. 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 attractive against its industry's average P/B of 3.49. Within the past 52 weeks, CPRI's P/B has been as high as 5.54 and as low as 2.46, with a median of 3.79.

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


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