Should Value Investors Buy Spartan Stores (SPTN) Stock?
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 fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.
Zacks has developed the innovative Style Scores system to highlight stocks with specific traits. For example, value investors will be interested in stocks with great grades in the "Value" category. When paired with a high Zacks Rank, "A" grades in the Value category are among the strongest value stocks on the market today.
One stock to keep an eye on is Spartan Stores (SPTN). SPTN is currently sporting a Zacks Rank of #1 (Strong Buy), as well as an A grade for Value. The stock has a Forward P/E ratio of 9.16. This compares to its industry's average Forward P/E of 15.58. Over the past year, SPTN's Forward P/E has been as high as 14.89 and as low as 7.59, with a median of 10.04.
We also note that SPTN holds a PEG ratio of 1.71. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. SPTN's PEG compares to its industry's average PEG of 1.72. Within the past year, SPTN's PEG has been as high as 1.94 and as low as 1.08, with a median of 1.35.
Another valuation metric that we should highlight is SPTN's P/B ratio of 1.02. 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 stock's P/B looks solid versus its industry's average P/B of 2.25. Over the past year, SPTN's P/B has been as high as 1.17 and as low as 0.49, with a median of 0.73.
Finally, investors should note that SPTN has a P/CF ratio of 5.18. This metric focuses on a firm's operating cash flow and is often used to find stocks that are undervalued based on the strength of their cash outlook. This stock's P/CF looks attractive against its industry's average P/CF of 8.44. Over the past year, SPTN's P/CF has been as high as 7.59 and as low as 3.53, with a median of 5.49.
These are just a handful of the figures considered in Spartan Stores's great Value grade. Still, they help show that the stock is likely being undervalued at the moment. Add this to the strength of its earnings outlook, and we can clearly see that SPTN is an impressive value stock right now.
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