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Are Investors Undervaluing Vipshop Holdings Limited (VIPS) Right Now?

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

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.

Considering these trends, value investing is clearly one of the most preferred ways to find strong stocks in any type of market. Value investors use fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.

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 Vipshop Holdings Limited (VIPS). VIPS is currently sporting a Zacks Rank of #2 (Buy) and an A for Value.

We should also highlight that VIPS has a P/B ratio of 1.94. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. This stock's P/B looks solid versus its industry's average P/B of 4.77. VIPS's P/B has been as high as 5.65 and as low as 1.24, with a median of 1.95, over the past year.

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. VIPS has a P/S ratio of 0.38. This compares to its industry's average P/S of 0.93.

Finally, investors will want to recognize that VIPS has a P/CF ratio of 10.46. This data point considers a firm's operating cash flow and is frequently used to find companies that are undervalued when considering their solid cash outlook. VIPS's current P/CF looks attractive when compared to its industry's average P/CF of 30.18. Over the past year, VIPS's P/CF has been as high as 25.63 and as low as 6.07, with a median of 10.36.

These are just a handful of the figures considered in Vipshop Holdings Limited's great Value grade. Still, they help show that the stock is likely being undervalued at the moment. Add this to the strength of its earnings outlook, and we can clearly see that VIPS is an impressive value stock right now.


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