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.
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.
In addition to the Zacks Rank, investors looking for stocks with specific traits can utilize our Style Scores system. Of course, value investors will be most interested in the system's "Value" category. Stocks with "A" grades for Value and high Zacks Ranks are among the best value stocks available at any given moment.
One company value investors might notice is Vipshop Holdings Limited (VIPS). VIPS is currently sporting a Zacks Rank of #2 (Buy), as well as a Value grade of A.
Another notable valuation metric for VIPS is its P/B ratio of 1.91. 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 4.41. Over the past 12 months, VIPS's P/B has been as high as 2.22 and as low as 1.24, with a median of 1.83.
Value investors also use the P/S ratio. The P/S ratio is is calculated as price divided by sales. This is a popular metric because sales are harder to manipulate on an income statement, so they are often considered a better performance indicator. VIPS has a P/S ratio of 0.43. This compares to its industry's average P/S of 0.71.
Finally, investors should note that VIPS has a P/CF ratio of 10.70. This metric focuses on a firm's operating cash flow and is often used to find stocks that are undervalued based on the strength of their cash outlook. VIPS's P/CF compares to its industry's average P/CF of 27.56. VIPS's P/CF has been as high as 12.87 and as low as 6.07, with a median of 10.28, all within the past year.
These figures are just a handful of the metrics value investors tend to look at, but they help show that Vipshop Holdings Limited is likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, VIPS feels like a great value stock at the moment.
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