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Should Value Investors Buy Vista Outdoor (VSTO) Stock?

Zacks Equity Research
·2 min read

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.

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 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.

One company to watch right now is Vista Outdoor (VSTO). VSTO is currently holding a Zacks Rank of #1 (Strong Buy) and a Value grade of A.

Another notable valuation metric for VSTO is its P/B ratio of 2.66. Investors use the P/B ratio to look at a stock's market value versus 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 7.52. Over the past 12 months, VSTO's P/B has been as high as 2.67 and as low as 0.46, with a median of 1.69.

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. VSTO has a P/S ratio of 0.79. This compares to its industry's average P/S of 1.83.

These are only a few of the key metrics included in Vista Outdoor'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, VSTO looks like an impressive value stock at the moment.


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