Should Value Investors Buy UniFirst (UNF) Stock?
Here at Zacks, our focus is on the proven Zacks Rank system, which emphasizes earnings estimates and estimate revisions to find great stocks. Nevertheless, we are always paying attention to the latest value, growth, and momentum trends to underscore strong picks.
Considering these trends, value investing is clearly one of the most preferred ways to find strong stocks in any type of market. Value investors use fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.
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 stock to keep an eye on is UniFirst (UNF). UNF is currently holding a Zacks Rank of #2 (Buy) and a Value grade of A. The stock is trading with P/E ratio of 21.22 right now. For comparison, its industry sports an average P/E of 26.37. UNF's Forward P/E has been as high as 25.67 and as low as 18.62, with a median of 21.04, all within the past year.
Investors should also note that UNF holds a PEG ratio of 2.06. 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. UNF's PEG compares to its industry's average PEG of 2.14. UNF's PEG has been as high as 2.57 and as low as 2, with a median of 2.45, all within 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 prefered metric because revenue can't really be manipulated, so sales are often a truer performance indicator. UNF has a P/S ratio of 1.75. This compares to its industry's average P/S of 1.78.
Finally, our model also underscores that UNF has a P/CF ratio of 12.08. This data point considers a firm's operating cash flow and is frequently used to find companies that are undervalued when considering their solid cash outlook. This stock's P/CF looks attractive against its industry's average P/CF of 17.84. Over the past year, UNF's P/CF has been as high as 17.87 and as low as 9.62, with a median of 11.69.
These are only a few of the key metrics included in UniFirst'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, UNF looks like an impressive 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.