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Should Value Investors Buy Vector Group (VGR) Stock?

·2 min read

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 tried-and-true metrics and fundamental analysis to find companies that they believe are undervalued at their current share price levels.

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 company value investors might notice is Vector Group (VGR). VGR is currently holding a Zacks Rank of #1 (Strong Buy) and a Value grade of A.

Value investors also frequently use the P/S ratio. This metric is found by dividing a stock's price with the company's revenue. This is a popular metric because sales are harder to manipulate on an income statement, so they are often considered a better performance indicator. VGR has a P/S ratio of 0.92. This compares to its industry's average P/S of 1.51.

Finally, our model also underscores that VGR has a P/CF ratio of 17.55. 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. VGR's current P/CF looks attractive when compared to its industry's average P/CF of 19.71. Over the past year, VGR's P/CF has been as high as 22.96 and as low as 12.79, with a median of 16.06.

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

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