Value investing is easily one of the most popular ways to find great stocks in any market environment. After all, who wouldn’t want to find stocks that are either flying under the radar and are compelling buys, or offer up tantalizing discounts when compared to fair value?
One way to find these companies is by looking at several key metrics and financial ratios, many of which are crucial in the value stock selection process. Let’s put Tech Data Corporation stock into this equation and find out if it is a good choice for value-oriented investors right now, or if investors subscribing to this methodology should look elsewhere for top picks:
PE Ratio
A key metric that value investors always look at is the Price to Earnings Ratio, or PE for short. This shows us how much investors are willing to pay for each dollar of earnings in a given stock, and is easily one of the most popular financial ratios in the world. The best use of the PE ratio is to compare the stock’s current PE ratio with: a) where this ratio has been in the past; b) how it compares to the average for the industry/sector; and c) how it compares to the market as a whole.
On this front, Tech Data has a trailing twelve months PE ratio of 14.91, as you can see in the chart below:
This level actually compares pretty favorably with the market at large, as the PE for the S&P 500 compares in at about 20.53. If we focus on the stock’s long-term PE trend, the current level puts Tech Data’s current PE ratio above its midpoint over the past five years, with the number having risen rapidly over the past few months.
Further, the stock’s PE also compares favorably with the Zacks classified Zacks Retail-Computer Hardware sub-industry’s trailing twelve months PE ratio, which stands at 15.24. At the very least, this indicates that the stock is relatively undervalued right now, compared to its peers.
We should also point out that Tech Data has a forward PE ratio (price relative to this year’s earnings) of just 13.65, so it is fair to say that a slightly more value-oriented path may be ahead for Target stock in the near term too.
P/S Ratio
Another key metric to note is the Price/Sales ratio. This approach compares a given stock’s price to its total sales, where a lower reading is generally considered better. Some people like this metric more than other value-focused ones because it looks at sales, something that is far harder to manipulate with accounting tricks than earnings.
Right now, Tech Data has a P/S ratio of about 0.13. This is lower than the S&P 500 average, which comes in at 3.11 right now. However, as we can see in the chart below, the current level is in line with the highs for this stock in particular over the past few years.
Broad Value Outlook
In aggregate, Tech Data currently has a Zacks Value Style Score of ‘A’, putting it into the top 20% of all stocks we cover from this look. This makes Target a solid choice for value investors, and some of its other key metrics make this pretty clear too.
For example, the PEG ratio for Tech Data is just 0.45, a level that is lower than the industry average of 1.23. The PEG ratio is a modified PE ratio that takes into account the stock’s earnings growth rate.
Additionally, its P/CF ratio (another great indicator of value) comes in at 27.83, which is much lower than the industry average of 37.99. Clearly, TECD is a solid choice on the value front from multiple angles.
What About the Stock Overall?
Though Tech Data might be a good choice for value investors, there are plenty of other factors to consider before investing in this name. In particular, it is worth noting that the company has a Growth grade of ‘C’ and a Momentum score of ‘A’. This gives TECD a Zacks VGM score—or its overarching fundamental grade—of ‘B’. (You can read more about the Zacks Style Scores here >>).
Meanwhile, the company’s recent earnings estimates have been encouraging. The current quarter has seen three estimates go higher in the past sixty days compared to no movement in the opposite direction, while the full year estimate has seen four up and no down in the same time period.
This has had a significant impact on the consensus estimate, as the current quarter consensus estimate jumped 26.9% in the past two months, while the full year estimate increased 47.4%. You can see the consensus estimate trend and recent price action for the stock in the chart below:
Notably, Tech Data has just a Zacks Rank #1 (Strong Buy) and why we are looking for in-line performance from the company in the near term.
Bottom Line
Tech Data is an inspired choice for value investors, as it is hard to beat its incredible lineup of statistics on this front. Furthermore, with a robust industry rank (among top 1%), the stock is expected to perform well in the long haul. In fact, over the past two years, the Zacks Retail-Computer Hardware industry has clearly outperformed the broader market, as you can see below:
We believe, a good industry and Zacks rank signal that the stock is likely to benefit from favorable broader factors in the immediate future. Add to this robust value metrics, and we believe that we have a strong value contender in Tech Data.
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Is Tech Data (TECD) a Great Stock for Value Investors?
Value investing is easily one of the most popular ways to find great stocks in any market environment. After all, who wouldn’t want to find stocks that are either flying under the radar and are compelling buys, or offer up tantalizing discounts when compared to fair value?
One way to find these companies is by looking at several key metrics and financial ratios, many of which are crucial in the value stock selection process. Let’s put Tech Data Corporation stock into this equation and find out if it is a good choice for value-oriented investors right now, or if investors subscribing to this methodology should look elsewhere for top picks:
PE Ratio
A key metric that value investors always look at is the Price to Earnings Ratio, or PE for short. This shows us how much investors are willing to pay for each dollar of earnings in a given stock, and is easily one of the most popular financial ratios in the world. The best use of the PE ratio is to compare the stock’s current PE ratio with: a) where this ratio has been in the past; b) how it compares to the average for the industry/sector; and c) how it compares to the market as a whole.
On this front, Tech Data has a trailing twelve months PE ratio of 14.91, as you can see in the chart below:
This level actually compares pretty favorably with the market at large, as the PE for the S&P 500 compares in at about 20.53. If we focus on the stock’s long-term PE trend, the current level puts Tech Data’s current PE ratio above its midpoint over the past five years, with the number having risen rapidly over the past few months.
Further, the stock’s PE also compares favorably with the Zacks classified Zacks Retail-Computer Hardware sub-industry’s trailing twelve months PE ratio, which stands at 15.24. At the very least, this indicates that the stock is relatively undervalued right now, compared to its peers.
We should also point out that Tech Data has a forward PE ratio (price relative to this year’s earnings) of just 13.65, so it is fair to say that a slightly more value-oriented path may be ahead for Target stock in the near term too.
P/S Ratio
Another key metric to note is the Price/Sales ratio. This approach compares a given stock’s price to its total sales, where a lower reading is generally considered better. Some people like this metric more than other value-focused ones because it looks at sales, something that is far harder to manipulate with accounting tricks than earnings.
Right now, Tech Data has a P/S ratio of about 0.13. This is lower than the S&P 500 average, which comes in at 3.11 right now. However, as we can see in the chart below, the current level is in line with the highs for this stock in particular over the past few years.
Broad Value Outlook
In aggregate, Tech Data currently has a Zacks Value Style Score of ‘A’, putting it into the top 20% of all stocks we cover from this look. This makes Target a solid choice for value investors, and some of its other key metrics make this pretty clear too.
For example, the PEG ratio for Tech Data is just 0.45, a level that is lower than the industry average of 1.23. The PEG ratio is a modified PE ratio that takes into account the stock’s earnings growth rate.
Additionally, its P/CF ratio (another great indicator of value) comes in at 27.83, which is much lower than the industry average of 37.99. Clearly, TECD is a solid choice on the value front from multiple angles.
What About the Stock Overall?
Though Tech Data might be a good choice for value investors, there are plenty of other factors to consider before investing in this name. In particular, it is worth noting that the company has a Growth grade of ‘C’ and a Momentum score of ‘A’. This gives TECD a Zacks VGM score—or its overarching fundamental grade—of ‘B’. (You can read more about the Zacks Style Scores here >>).
Meanwhile, the company’s recent earnings estimates have been encouraging. The current quarter has seen three estimates go higher in the past sixty days compared to no movement in the opposite direction, while the full year estimate has seen four up and no down in the same time period.
This has had a significant impact on the consensus estimate, as the current quarter consensus estimate jumped 26.9% in the past two months, while the full year estimate increased 47.4%. You can see the consensus estimate trend and recent price action for the stock in the chart below:
Tech Data Corporation Price and Consensus
Tech Data Corporation Price and Consensus | Tech Data Corporation Quote
Notably, Tech Data has just a Zacks Rank #1 (Strong Buy) and why we are looking for in-line performance from the company in the near term.
Bottom Line
Tech Data is an inspired choice for value investors, as it is hard to beat its incredible lineup of statistics on this front. Furthermore, with a robust industry rank (among top 1%), the stock is expected to perform well in the long haul. In fact, over the past two years, the Zacks Retail-Computer Hardware industry has clearly outperformed the broader market, as you can see below:
We believe, a good industry and Zacks rank signal that the stock is likely to benefit from favorable broader factors in the immediate future. Add to this robust value metrics, and we believe that we have a strong value contender in Tech Data.
5 Trades Could Profit ""Big-League"" from Trump Policies
If the stocks above spark your interest, wait until you look into companies primed to make substantial gains from Washington's changing course.
Today Zacks reveals 5 tickers that could benefit from new trends like streamlined drug approvals, tariffs, lower taxes, higher interest rates, and spending surges in defense and infrastructure. See these buy recommendations now >>