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Is Red Lion Hotels (RLH) Stock Undervalued 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.

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 a variety of methods, including tried-and-true valuation metrics, to find these stocks.

On top of the Zacks Rank, investors can also look at our innovative Style Scores system to find stocks with specific traits. For example, value investors will want to focus on the "Value" category. Stocks with high Zacks Ranks and "A" grades for Value will be some of the highest-quality value stocks on the market today.

One stock to keep an eye on is Red Lion Hotels (RLH). RLH is currently sporting a Zacks Rank of #2 (Buy) and an A for Value.

Value investors also use the P/S ratio. The P/S ratio is is calculated as price divided by sales. This is a popular metric because sales are harder to manipulate on an income statement, so they are often considered a better performance indicator. RLH has a P/S ratio of 1.41. This compares to its industry's average P/S of 1.62.

Finally, investors should note that RLH has a P/CF ratio of 9.72. 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. RLH's current P/CF looks attractive when compared to its industry's average P/CF of 15.99. Over the past year, RLH's P/CF has been as high as 14.28 and as low as 6.20, with a median of 10.32.

These are only a few of the key metrics included in Red Lion Hotels'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, RLH looks like an impressive value stock at the moment.


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