Are Investors Undervaluing Sysco (SYY) 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.
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 to watch right now is Sysco (SYY). SYY is currently sporting a Zacks Rank of #2 (Buy), as well as a Value grade of A.
Investors should also note that SYY holds a PEG ratio of 1.77. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. SYY's industry has an average PEG of 2.20 right now. Over the last 12 months, SYY's PEG has been as high as 2.22 and as low as 1.62, with a median of 1.81.
Value investors also love the P/S ratio, which is calculated by simply dividing a stock's price with the company's sales. Some people prefer this metric because sales are harder to manipulate on an income statement. This means it could be a truer performance indicator. SYY has a P/S ratio of 0.58. This compares to its industry's average P/S of 1.08.
Value investors will likely look at more than just these metrics, but the above data helps show that Sysco is likely undervalued currently. And when considering the strength of its earnings outlook, SYY sticks out at as one of the market's strongest value stocks.
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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.