Are Investors Undervaluing Guess (GES) 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.
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 value investors might notice is Guess (GES). GES is currently holding a Zacks Rank of #1 (Strong Buy) and a Value grade of A. The stock is trading with a P/E ratio of 11.47, which compares to its industry's average of 15.09. Over the past year, GES's Forward P/E has been as high as 19.80 and as low as 9.42, with a median of 14.75.
GES is also sporting a PEG ratio of 0.66. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. GES's industry currently sports an average PEG of 1.06. GES's PEG has been as high as 1.13 and as low as 0.54, with a median of 0.84, all within the past year.
Investors should also recognize that GES has a P/B ratio of 2.25. 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. GES's current P/B looks attractive when compared to its industry's average P/B of 6.09. Over the past 12 months, GES's P/B has been as high as 2.62 and as low as 1.58, with a median of 2.05.
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. GES has a P/S ratio of 0.46. This compares to its industry's average P/S of 0.6.
Finally, our model also underscores that GES has a P/CF ratio of 14.73. 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. This company's current P/CF looks solid when compared to its industry's average P/CF of 23.94. GES's P/CF has been as high as 32.28 and as low as 11.42, with a median of 20.79, 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 Guess is likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, GES 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.