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Should Value Investors Buy China Distance (DL) Stock?

Zacks Equity Research
AK Steel (AKS) possesses the right combination of the two key ingredients for a likely earnings beat in its upcoming report. Get prepared with the key expectations.

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 rely on traditional forms of analysis on key valuation metrics to find stocks that they believe are undervalued, leaving room for profits.

Luckily, Zacks has developed its own Style Scores system in an effort to find stocks with specific traits. Value investors will be interested in the system's "Value" category. Stocks with both "A" grades in the Value category and high Zacks Ranks are among the strongest value stocks on the market right now.

One stock to keep an eye on is China Distance (DL). DL is currently sporting a Zacks Rank of #2 (Buy) and an A for Value. The stock has a Forward P/E ratio of 8.74. This compares to its industry's average Forward P/E of 23.41. Over the past 52 weeks, DL's Forward P/E has been as high as 9.24 and as low as 8.74, with a median of 9.09.

We also note that DL holds a PEG ratio of 0.58. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. DL's PEG compares to its industry's average PEG of 0.78. Within the past year, DL's PEG has been as high as 0.62 and as low as 0.58, with a median of 0.61.

Value investors also love the P/S ratio, which is calculated by simply dividing a stock's price with the company's 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. DL has a P/S ratio of 0.98. This compares to its industry's average P/S of 1.3.

These are just a handful of the figures considered in China Distance'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 DL is an impressive value stock right now.


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China Distance Education Holdings Limited (DL) : Free Stock Analysis Report
 
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