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 tried-and-true metrics and fundamental analysis to find companies that they believe are undervalued at their current share price levels.
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 company value investors might notice is Signet Jewelers (SIG). SIG is currently sporting a Zacks Rank #2 (Buy), as well as an A grade for Value.
Investors will also notice that SIG has a PEG ratio of 1.04. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. SIG's industry has an average PEG of 1.15 right now. Over the past 52 weeks, SIG's PEG has been as high as 3.86 and as low as 0.39, with a median of 0.94.
We should also highlight that SIG has a P/B ratio of 2.27. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. This company's current P/B looks solid when compared to its industry's average P/B of 3.39. Over the past year, SIG's P/B has been as high as 2.52 and as low as 1.04, with a median of 1.87.
Value investors also use the P/S ratio. The P/S ratio is calculated as price divided by 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. SIG has a P/S ratio of 0.5. This compares to its industry's average P/S of 0.84.
These figures are just a handful of the metrics value investors tend to look at, but they help show that Signet Jewelers is likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, SIG feels like a great value stock at the moment.
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Signet Jewelers Limited (SIG): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).