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Should Value Investors Buy Turtle Beach (HEAR) Stock?

Zacks Equity Research

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 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.

Turtle Beach (HEAR) is a stock many investors are watching right now. HEAR is currently sporting a Zacks Rank of #1 (Strong Buy), as well as an A grade for Value. The stock holds a P/E ratio of 9.27, while its industry has an average P/E of 21.90. Over the last 12 months, HEAR's Forward P/E has been as high as 13.63 and as low as 5.40, with a median of 9.03.

We also note that HEAR holds a PEG ratio of 0.93. 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. HEAR's industry has an average PEG of 1.99 right now. Within the past year, HEAR's PEG has been as high as 1.51 and as low as 0.36, with a median of 0.90.

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. HEAR has a P/S ratio of 0.62. This compares to its industry's average P/S of 1.35.

Finally, we should also recognize that HEAR has a P/CF ratio of 3.65. 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. HEAR's P/CF compares to its industry's average P/CF of 8.64. Over the past year, HEAR's P/CF has been as high as 16.38 and as low as 2.79, with a median of 4.34.

These are only a few of the key metrics included in Turtle Beach'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, HEAR looks like an impressive value stock at the moment.

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