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Should Value Investors Buy Vipshop Holdings Limited (VIPS) Stock?

Zacks Equity Research
Bausch (BHC) has been upgraded to a Zacks Rank 2 (Buy), reflecting growing optimism about the company's earnings prospects. This might drive the stock higher in the near term.

Here at Zacks, our focus is on the proven Zacks Rank system, which emphasizes earnings estimates and estimate revisions to find great stocks. Nevertheless, we are always paying attention to the latest value, growth, and momentum trends to underscore strong picks.

Of these, value investing is easily one of the most popular ways to find great stocks in any market environment. Value investors rely on traditional forms of analysis on key valuation metrics to find stocks that they believe are undervalued, leaving room for profits.

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 to watch right now is Vipshop Holdings Limited (VIPS). VIPS is currently sporting a Zacks Rank of #1 (Strong Buy), as well as an A grade for Value.

Another valuation metric that we should highlight is VIPS's P/B ratio of 1.93. The P/B ratio is used to compare a stock's market value with its book value, which is defined as total assets minus total liabilities. This company's current P/B looks solid when compared to its industry's average P/B of 4.87. VIPS's P/B has been as high as 5.68 and as low as 1.24, with a median of 2.10, over the past year.

Finally, investors should note that VIPS has a P/CF ratio of 9.28. This figure highlights a company's operating cash flow and can be used to find firms that are undervalued when considering their impressive cash outlook. This stock's P/CF looks attractive against its industry's average P/CF of 30.40. Over the past 52 weeks, VIPS's P/CF has been as high as 25.29 and as low as 5.97, with a median of 10.13.

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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