Are Investors Undervaluing Dick's Sporting Goods (DKS) 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, perhaps no stock market trend is more popular than value investing, which is a strategy that has proven to be successful in all sorts of market environments. Value investors use a variety of methods, including tried-and-true valuation metrics, to find these stocks.
On top of the Zacks Rank, investors can also look at our innovative Style Scores system to find stocks with specific traits. For example, value investors will want to focus on the "Value" category. Stocks with high Zacks Ranks and "A" grades for Value will be some of the highest-quality value stocks on the market today.
One company value investors might notice is Dick's Sporting Goods (DKS). DKS is currently sporting a Zacks Rank of #1 (Strong Buy) and an A for Value. The stock has a Forward P/E ratio of 13.54. This compares to its industry's average Forward P/E of 20.03. Over the past 52 weeks, DKS's Forward P/E has been as high as 30.38 and as low as 10.19, with a median of 15.06.
Investors should also recognize that DKS has a P/B ratio of 3.35. 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 5.75. DKS's P/B has been as high as 3.39 and as low as 1.82, with a median of 2.60, over the past year.
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. DKS has a P/S ratio of 0.78. This compares to its industry's average P/S of 0.88.
Finally, our model also underscores that DKS has a P/CF ratio of 7.48. This metric takes into account a company's operating cash flow and can be used to find stocks that are undervalued based on their solid cash outlook. DKS's P/CF compares to its industry's average P/CF of 23.84. Over the past year, DKS's P/CF has been as high as 10.10 and as low as 6.34, with a median of 8.49.
These are only a few of the key metrics included in Dick's Sporting Goods'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, DKS looks like an impressive value stock at the moment.
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