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Are Investors Undervaluing Yirendai (YRD) Right Now?

Zacks Equity Research

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.

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.

Yirendai (YRD) is a stock many investors are watching right now. YRD is currently holding a Zacks Rank of #1 (Strong Buy) and a Value grade of A.

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. YRD has a P/S ratio of 0.82. This compares to its industry's average P/S of 2.34.

Finally, investors should note that YRD has a P/CF ratio of 6.76. This metric focuses on a firm's operating cash flow and is often used to find stocks that are undervalued based on the strength of their cash outlook. YRD's current P/CF looks attractive when compared to its industry's average P/CF of 17.19. Within the past 12 months, YRD's P/CF has been as high as 10.12 and as low as 3.66, with a median of 5.88.

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


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