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Is Zumiez (ZUMZ) a Great Value Stock Right Now?

Zacks Equity Research
·3 min read

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.

Considering these trends, value investing is clearly one of the most preferred ways to find strong stocks in any type of market. Value investors use a variety of methods, including tried-and-true valuation metrics, to find these stocks.

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 Zumiez (ZUMZ). ZUMZ is currently sporting a Zacks Rank of #2 (Buy) and an A for Value. The stock has a Forward P/E ratio of 7.20. This compares to its industry's average Forward P/E of 13.11. Over the last 12 months, ZUMZ's Forward P/E has been as high as 15.82 and as low as 6.35, with a median of 13.17.

We also note that ZUMZ holds a PEG ratio of 0.60. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. ZUMZ's PEG compares to its industry's average PEG of 1.36. Over the last 12 months, ZUMZ's PEG has been as high as 1.28 and as low as 0.53, with a median of 1.02.

Another valuation metric that we should highlight is ZUMZ's P/B ratio of 1.17. 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 attractive against its industry's average P/B of 3.35. Over the past year, ZUMZ's P/B has been as high as 2.17 and as low as 1.03, with a median of 1.73.

Finally, our model also underscores that ZUMZ has a P/CF ratio of 5.39. 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. This company's current P/CF looks solid when compared to its industry's average P/CF of 8.59. Over the past 52 weeks, ZUMZ's P/CF has been as high as 10.95 and as low as 4.76, with a median of 8.99.

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


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Zacks Investment Research