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Are Investors Undervaluing GMS (GMS) Right Now?

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·3 min read
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Here at Zacks, we focus on our proven ranking system, which places an emphasis on earnings estimates and estimate revisions, to find winning stocks. But we also understand that investors develop their own strategies, so we are constantly looking at the latest trends in value, growth, and momentum to find strong companies for our readers.

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.

On top of the Zacks Rank, investors can also look at our innovative Style Scores system to find stocks with specific traits. For example, value investors will want to focus on the "Value" category. Stocks with high Zacks Ranks and "A" grades for Value will be some of the highest-quality value stocks on the market today.

GMS (GMS) is a stock many investors are watching right now. GMS is currently holding a Zacks Rank of #2 (Buy) and a Value grade of A. The stock holds a P/E ratio of 11.13, while its industry has an average P/E of 22.77. GMS's Forward P/E has been as high as 13.53 and as low as 4.13, with a median of 9.21, all within the past year.

Investors should also note that GMS holds a PEG ratio of 0.63. 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. GMS's industry currently sports an average PEG of 1.81.

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. GMS has a P/S ratio of 0.56. This compares to its industry's average P/S of 1.03.

Finally, our model also underscores that GMS has a P/CF ratio of 12.50. This metric takes into account a company's operating cash flow and can be used to find stocks that are undervalued based on their solid cash outlook. This company's current P/CF looks solid when compared to its industry's average P/CF of 15.41. GMS's P/CF has been as high as 13.49 and as low as 2.84, with a median of 7.71, all within the past year.

These are only a few of the key metrics included in GMS'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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