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Is Shoe Carnival (SCVL) Stock Undervalued Right Now?

Zacks Equity Research

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.

Looking at the history of these trends, perhaps none is more beloved than value investing. This strategy simply looks to identify companies that are being undervalued by the broader 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.

Shoe Carnival (SCVL) is a stock many investors are watching right now. SCVL is currently sporting a Zacks Rank of #2 (Buy), as well as an A grade for Value. The stock is trading with P/E ratio of 9.66 right now. For comparison, its industry sports an average P/E of 13.04. Over the last 12 months, SCVL's Forward P/E has been as high as 19.59 and as low as 8.86, with a median of 14.34.

SCVL is also sporting a PEG ratio of 1.24. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. SCVL's PEG compares to its industry's average PEG of 1.26. SCVL's PEG has been as high as 1.35 and as low as 1.21, with a median of 1.28, all within the past year.

Investors should also recognize that SCVL has a P/B ratio of 1.40. The P/B ratio pits a stock's market value against 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 2.96. Within the past 52 weeks, SCVL's P/B has been as high as 2.28 and as low as 1.28, with a median of 1.82.

Value investors also use the P/S ratio. The P/S ratio is is calculated as price divided by sales. This is a prefered metric because revenue can't really be manipulated, so sales are often a truer performance indicator. SCVL has a P/S ratio of 0.39. This compares to its industry's average P/S of 0.41.

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


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