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Are Investors Undervaluing Signet (SIG) Right Now?

Zacks Equity Research

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, 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.

Luckily, Zacks has developed its own Style Scores system in an effort to find stocks with specific traits. Value investors will be interested in the system's "Value" category. Stocks with both "A" grades in the Value category and high Zacks Ranks are among the strongest value stocks on the market right now.

One stock to keep an eye on is Signet (SIG). SIG is currently sporting a Zacks Rank of #1 (Strong Buy) and an A for Value.

Investors should also note that SIG holds a PEG ratio of 0.87. 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. SIG's PEG compares to its industry's average PEG of 1.88. Over the last 12 months, SIG's PEG has been as high as 2.14 and as low as 0.57, with a median of 1.11.

Value investors also use the P/S ratio. The P/S ratio is is calculated as price divided by 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. SIG has a P/S ratio of 0.14. This compares to its industry's average P/S of 0.27.

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


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