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

Zacks Equity Research

The proven Zacks Rank system focuses on earnings estimates and estimate revisions to find winning stocks. Nevertheless, we know that our readers all have their own perspectives, so we are always looking at the latest trends in value, growth, and momentum to find 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 use tried-and-true metrics and fundamental analysis to find companies that they believe are undervalued at their current share price levels.

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 to watch right now is Vipshop Holdings Limited (VIPS). VIPS is currently holding a Zacks Rank of #2 (Buy) and a Value grade of A.

We should also highlight that VIPS has a P/B ratio of 2.38. 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. VIPS's current P/B looks attractive when compared to its industry's average P/B of 4.14. VIPS's P/B has been as high as 2.38 and as low as 1.24, with a median of 1.89, over the past year.

Value investors also frequently use the P/S ratio. This metric is found by dividing a stock's price with the company's revenue. This is a popular metric because sales are harder to manipulate on an income statement, so they are often considered a better performance indicator. VIPS has a P/S ratio of 0.59. This compares to its industry's average P/S of 0.71.

Finally, we should also recognize that VIPS has a P/CF ratio of 13.52. This figure highlights a company's operating cash flow and can be used to find firms that are undervalued when considering their impressive cash outlook. VIPS's P/CF compares to its industry's average P/CF of 30.93. Over the past year, VIPS's P/CF has been as high as 13.52 and as low as 5.97, with a median of 11.27.

These figures are just a handful of the metrics value investors tend to look at, but they help show that Vipshop Holdings Limited is likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, VIPS feels like a great value stock at the moment.


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