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3 Reasons Value Stock Investors Will Love Outerwall (OUTR)

Many investors like to look for value in stocks, but this can be very tough to define. There is great debate regarding which metrics are the best to focus on in this regard, and which are not really quality indicators of future performance. Fortunately, with our new style score system we have identified the key statistics to pay close attention to and thus which stocks might be the best for value investors in the near term.

This method discovered several great candidates for value-oriented investors, but today let's focus on Outerwall Inc.OUTR as this stock is looking especially impressive right now. And while there are numerous reasons why this is the case, we have highlighted three of the most vital reasons for OUTR's status as a solid value stock below:

Price to Forward Sales for Outerwall

One of the most underrated ratios for value investors is the price/forward sales metric. This ratio shows investors how much they are paying for each dollar of revenues generated. In other words, a lower number is better here while a price to sales ratio of 1 means that you are paying one dollar for each dollar in sales.

With a P/S ratio of 0.49, OUTR investors are paying 49 cents in stock price for each dollar of revenue generated by the company. Compare this to the industry average of 1.52, and it is safe to say that OUTR is undervalued compared to many of its peers on this important metric.

Forward PE for Outerwall

Easily one of the most popular readings for value investors, the forward PE ratio shows us the current price of a stock divided by the full year earnings. Generally speaking, value investors like to see this ratio below 20, though it can vary by industry.

Right now, OUTR has a forward PE of just 7.05, which means that investors are paying $7.05 for each dollar in expected Outerwall earnings this year. Compared to the industry at large this is pretty favorable as the overall space has an average PE of 25.40 in comparison.

OUTR Earnings Estimate Revisions Moving in the Right Direction

The solid value ratios outlined in the preceding paragraphs might be enough for some investors, but we should also note that the earnings estimate revisions have been trending in a positive direction as well. Analysts who follow OUTR stock have been raising their estimates for the company lately, meaning that the EPS picture is looking a bit more favorably for Outerwall now.

Over the past 60 days 6 earnings estimates have gone higher compared to no downward revisions for the full year, while we are also seeing a ratio of 6:2 in terms up:down revisions for the next year time frame too. These revisions have helped to boost the consensus estimate as 60 days ago OUTR was expected to post earnings of $8.56 per share for the full year though today it looks to have EPS of $9.17 for the full year.

Bottom Line

For the reasons detailed above, investors shouldn't be surprised to read that we have OUTR as a stock with a Value Score of 'A' and a Zacks Rank #2 (Buy). So if you are a value investor, definitely keep OUTR on your short list as this looks be a stock that is very well-positioned for gains in the near term.

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OUTERWALL INC (OUTR): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.