The proven Zacks Rank system focuses on earnings estimates and estimate revisions to find winning stocks. Nevertheless, we know that our readers all have their own perspectives, so we are always looking at the latest trends in value, growth, and momentum to find strong picks.
Of these, value investing is easily one of the most popular ways to find great stocks in any market environment. Value investors rely on traditional forms of analysis on key valuation metrics to find stocks that they believe are undervalued, leaving room for profits.
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 #1 (Strong Buy), as well as a Value grade of A.
Another notable valuation metric for SIG is its P/B ratio of 2.27. 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 attractive against its industry's average P/B of 4.26. Within the past 52 weeks, 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 frequently use the P/S ratio. This metric is found by dividing a stock's price with the company's revenue. This is a popular metric because sales are harder to manipulate on an income statement, so they are often considered a better performance indicator. SIG has a P/S ratio of 0.66. This compares to its industry's average P/S of 0.87.
Finally, our model also underscores that SIG has a P/CF ratio of 14.18. This figure highlights a company's operating cash flow and can be used to find firms that are undervalued when considering their impressive cash outlook. This company's current P/CF looks solid when compared to its industry's average P/CF of 18.14. Over the past 52 weeks, SIG's P/CF has been as high as 19.56 and as low as 3.47, with a median of 11.53.
These are only a few of the key metrics included in Signet Jewelers'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, SIG looks like an impressive 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).