Are Investors Undervaluing Designer Brands (DBI) Right Now?

While the proven Zacks Rank places an emphasis on earnings estimates and estimate revisions to find strong stocks, we also know that investors tend to develop their own individual strategies. With this in mind, we are always looking at value, growth, and momentum trends to discover great companies.

Of these, value investing is easily one of the most popular ways to find great stocks in any market environment. Value investors use tried-and-true metrics and fundamental analysis to find companies that they believe are undervalued at their current share price levels.

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 stock to keep an eye on is Designer Brands (DBI). DBI is currently sporting a Zacks Rank of #2 (Buy), as well as a Value grade of A. The stock is trading with P/E ratio of 14.67 right now. For comparison, its industry sports an average P/E of 17.01. Over the past year, DBI's Forward P/E has been as high as 15.32 and as low as 3.60, with a median of 7.09.

Investors should also recognize that DBI has a P/B ratio of 1.58. 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 4.37. Within the past 52 weeks, DBI's P/B has been as high as 1.88 and as low as 0.94, with a median of 1.38.

Value investors also love the P/S ratio, which is calculated by simply dividing a stock's price with the company's sales. This is a prefered metric because revenue can't really be manipulated, so sales are often a truer performance indicator. DBI has a P/S ratio of 0.2. This compares to its industry's average P/S of 0.43.

Finally, investors should note that DBI has a P/CF ratio of 3.93. This data point considers a firm's operating cash flow and is frequently used to find companies that are undervalued when considering their solid cash outlook. This stock's P/CF looks attractive against its industry's average P/CF of 14.73. DBI's P/CF has been as high as 4.68 and as low as 1.87, with a median of 3.20, 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 Designer Brands is likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, DBI feels like a great value stock at the moment.

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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.

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