Are Investors Undervaluing Genesco (GCO) 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.
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 use fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.
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 to watch right now is Genesco (GCO). GCO is currently holding a Zacks Rank of #1 (Strong Buy) and a Value grade of A. The stock has a Forward P/E ratio of 9.33. This compares to its industry's average Forward P/E of 9.95. GCO's Forward P/E has been as high as 14.22 and as low as 8.26, with a median of 12.07, all within the past year.
Investors should also recognize that GCO has a P/B ratio of 1.04. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. GCO's current P/B looks attractive when compared to its industry's average P/B of 2.95. Over the past 12 months, GCO's P/B has been as high as 1.33 and as low as 0.83, with a median of 1.10.
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 popular metric because sales are harder to manipulate on an income statement, so they are often considered a better performance indicator. GCO has a P/S ratio of 0.25. This compares to its industry's average P/S of 0.48.
These figures are just a handful of the metrics value investors tend to look at, but they help show that Genesco is likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, GCO feels like a great value stock at the moment.
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