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Are Investors Undervaluing Sportsman's Warehouse (SPWH) Right Now?

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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.

Looking at the history of these trends, perhaps none is more beloved than value investing. This strategy simply looks to identify companies that are being undervalued by the broader market. 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 stock to keep an eye on is Sportsman's Warehouse (SPWH). SPWH is currently sporting a Zacks Rank of #1 (Strong Buy) and an A for Value. The stock holds a P/E ratio of 8.64, while its industry has an average P/E of 19.75. Over the past 52 weeks, SPWH's Forward P/E has been as high as 20.99 and as low as 8.50, with a median of 14.67.

We should also highlight that SPWH has a P/B ratio of 3.63. 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. SPWH's current P/B looks attractive when compared to its industry's average P/B of 9.11. Over the past year, SPWH's P/B has been as high as 6.74 and as low as 2.90, with a median of 3.73.

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. SPWH has a P/S ratio of 0.51. This compares to its industry's average P/S of 0.82.

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


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