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Are Investors Undervaluing Sprint (S) Right Now?

Zacks Equity Research
Shoe Carnival (SCVL) delivered earnings and revenue surprises of 24.59% and 1.43%, respectively, for the quarter ended October 2018. Do the numbers hold clues to what lies ahead for the stock?

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.

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.

In addition to the Zacks Rank, investors looking for stocks with specific traits can utilize our Style Scores system. Of course, value investors will be most interested in the system's "Value" category. Stocks with "A" grades for Value and high Zacks Ranks are among the best value stocks available at any given moment.

One company value investors might notice is Sprint (S). S is currently sporting a Zacks Rank of #2 (Buy), as well as an A grade for Value.

Another valuation metric that we should highlight is S's P/B ratio of 0.90. 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 company's current P/B looks solid when compared to its industry's average P/B of 1.51. Over the past 12 months, S's P/B has been as high as 1.40 and as low as 0.73, with a median of 0.85.

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 prefered metric because revenue can't really be manipulated, so sales are often a truer performance indicator. S has a P/S ratio of 0.76. This compares to its industry's average P/S of 1.29.

Finally, investors should note that S has a P/CF ratio of 1.59. 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. S's P/CF compares to its industry's average P/CF of 3.76. Over the past 52 weeks, S's P/CF has been as high as 3.55 and as low as 1.24, with a median of 1.48.

These are only a few of the key metrics included in Sprint'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, S looks like an impressive value stock at the moment.


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