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.
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 rely on traditional forms of analysis on key valuation metrics to find stocks that they believe are undervalued, leaving room for profits.
In addition to the Zacks Rank, investors looking for stocks with specific traits can utilize our Style Scores system. Of course, value investors will be most interested in the system's "Value" category. Stocks with "A" grades for Value and high Zacks Ranks are among the best value stocks available at any given moment.
One company value investors might notice is Urban Outfitters (URBN). URBN is currently sporting a Zacks Rank #2 (Buy), as well as an A grade for Value.
Another valuation metric that we should highlight is URBN's P/B ratio of 2.48. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. This stock's P/B looks attractive against its industry's average P/B of 5.48. Over the past year, URBN's P/B has been as high as 2.97 and as low as 1.40, with a median of 2.14.
Finally, investors will want to recognize that URBN has a P/CF ratio of 10.93. 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. URBN's current P/CF looks attractive when compared to its industry's average P/CF of 12.19. Over the past 52 weeks, URBN's P/CF has been as high as 12.80 and as low as 7.56, with a median of 10.42.
These are only a few of the key metrics included in Urban Outfitters'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, URBN looks like an impressive value stock at the moment.
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Urban Outfitters, Inc. (URBN): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).