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Should Value Investors Buy Spartan Stores (SPTN) Stock?

Zacks Equity Research
·3 mins read

While the proven Zacks Rank places an emphasis on earnings estimates and estimate revisions to find strong stocks, we also know that investors tend to develop their own individual strategies. With this in mind, we are always looking at value, growth, and momentum trends to discover great companies.

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

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.

One stock to keep an eye on is Spartan Stores (SPTN). SPTN is currently sporting a Zacks Rank of #1 (Strong Buy), as well as an A grade for Value. The stock has a Forward P/E ratio of 11.10. This compares to its industry's average Forward P/E of 20.18. Over the last 12 months, SPTN's Forward P/E has been as high as 14.89 and as low as 6.03, with a median of 9.61.

We also note that SPTN holds a PEG ratio of 1.71. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. SPTN's PEG compares to its industry's average PEG of 2.44. Within the past year, SPTN's PEG has been as high as 1.94 and as low as 0.86, with a median of 1.30.

Investors should also recognize that SPTN has a P/B ratio of 1.09. The P/B is a method of comparing a stock's market value to 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 3.16. Over the past year, SPTN's P/B has been as high as 1.17 and as low as 0.47, with a median of 0.70.

Finally, investors will want to recognize that SPTN has a P/CF ratio of 5.91. This data point considers a firm's operating cash flow and is frequently used to find companies that are undervalued when considering their solid cash outlook. SPTN's current P/CF looks attractive when compared to its industry's average P/CF of 9.96. SPTN's P/CF has been as high as 6.27 and as low as 3.26, with a median of 5.03, all within the past year.

These are just a handful of the figures considered in Spartan Stores'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 SPTN is an impressive value stock right now.


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Zacks Investment Research