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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.
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.
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 Kohl's (KSS - Free Report) . KSS is currently sporting a Zacks Rank of #2 (Buy), as well as a Value grade of A.
Another notable valuation metric for KSS is its P/B ratio of 1.71. The P/B is a method of comparing a stock's market value to 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 2.72. KSS's P/B has been as high as 1.96 and as low as 1.28, with a median of 1.62, over 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. KSS has a P/S ratio of 0.4. This compares to its industry's average P/S of 0.6.
Finally, we should also recognize that KSS has a P/CF ratio of 4.38. This metric takes into account a company's operating cash flow and can be used to find stocks that are undervalued based on their solid cash outlook. KSS's current P/CF looks attractive when compared to its industry's average P/CF of 5.07. Over the past 52 weeks, KSS's P/CF has been as high as 13.77 and as low as 3.74, with a median of 4.80.
If you're looking for another solid Retail - Regional Department Stores value stock, take a look at Macy's (M - Free Report) . M is a # 2 (Buy) stock with a Value score of A.
Macy's is trading at a forward earnings multiple of 5.68 at the moment, with a PEG ratio of 0.47. This compares to its industry's average P/E of 7.78 and average PEG ratio of 0.72.
Over the last 12 months, M's P/E has been as high as 22.18, as low as 4.96, with a median of 7.27, and its PEG ratio has been as high as 1.85, as low as 0.41, with a median of 0.61.
Macy's sports a P/B ratio of 1.98 as well; this compares to its industry's price-to-book ratio of 2.72. In the past 52 weeks, M's P/B has been as high as 3.72, as low as 1.65, with a median of 2.17.
Value investors will likely look at more than just these metrics, but the above data helps show that Kohl's and Macy's are likely undervalued currently. And when considering the strength of its earnings outlook, KSS and M sticks out as one of the market's strongest value stocks.
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Is Kohl's (KSS) a Great Value Stock Right Now?
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.
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.
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 Kohl's (KSS - Free Report) . KSS is currently sporting a Zacks Rank of #2 (Buy), as well as a Value grade of A.
Another notable valuation metric for KSS is its P/B ratio of 1.71. The P/B is a method of comparing a stock's market value to 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 2.72. KSS's P/B has been as high as 1.96 and as low as 1.28, with a median of 1.62, over 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. KSS has a P/S ratio of 0.4. This compares to its industry's average P/S of 0.6.
Finally, we should also recognize that KSS has a P/CF ratio of 4.38. This metric takes into account a company's operating cash flow and can be used to find stocks that are undervalued based on their solid cash outlook. KSS's current P/CF looks attractive when compared to its industry's average P/CF of 5.07. Over the past 52 weeks, KSS's P/CF has been as high as 13.77 and as low as 3.74, with a median of 4.80.
If you're looking for another solid Retail - Regional Department Stores value stock, take a look at Macy's (M - Free Report) . M is a # 2 (Buy) stock with a Value score of A.
Macy's is trading at a forward earnings multiple of 5.68 at the moment, with a PEG ratio of 0.47. This compares to its industry's average P/E of 7.78 and average PEG ratio of 0.72.
Over the last 12 months, M's P/E has been as high as 22.18, as low as 4.96, with a median of 7.27, and its PEG ratio has been as high as 1.85, as low as 0.41, with a median of 0.61.
Macy's sports a P/B ratio of 1.98 as well; this compares to its industry's price-to-book ratio of 2.72. In the past 52 weeks, M's P/B has been as high as 3.72, as low as 1.65, with a median of 2.17.
Value investors will likely look at more than just these metrics, but the above data helps show that Kohl's and Macy's are likely undervalued currently. And when considering the strength of its earnings outlook, KSS and M sticks out as one of the market's strongest value stocks.