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Is Container Store (TCS) a Great Stock for Value Investors?
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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 The Container Store Group, Inc. (TCS - Free Report) 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, The Container Store has a trailing twelve months PE ratio of 17.1, 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 stands at about 20. If we focus on the long-term PE trend, The Container Store’s current PE level puts it well below its midpoint over the past three years. Moreover, the current level is significantly below the highs for this stock, suggesting that the stock is undervalued compared to its historical levels.
Further, the stock’s PE also compares favorably with its industry’s trailing twelve months PE ratio, which stands at 18.2. At the very least, this indicates that the stock is relatively undervalued right now, compared to its peers.
We should also point out that The Container Store has a forward PE ratio (price relative to this year’s earnings) of 13.1, so it is fair to say that a slightly more value-oriented path may be ahead for the 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, The Container Store has a P/S ratio of 0.2. This is lower than the S&P 500 average, which comes in at 3.1 right now.
If anything, this suggests some level of undervalued trading—at least compared to historical norms.
Broad Value Outlook
In aggregate, The Container Store 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 The Container Store a solid choice for value investors.
What About the Stock Overall?
Though The Container Store 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 ‘D’. This gives TCS 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 discouraging. The current quarter and year has seen one estimates go higher in the past thirty days compared to one lower.
This has had a noticeable impact on the consensus estimate as the current quarter consensus estimate has dropped by 40% in the past one month, while the current year estimate has decreased by 3.1%. You can see the consensus estimate trend and recent price action for the stock in the chart below:
This negative trend is why the stock has just a Zacks Rank #3 (Hold) despite strong value metrics and why we are looking for in-line performance from the company in the near term.
Bottom Line
The Container Store is an inspired choice for value investors, as it is hard to beat its incredible lineup of statistics on this front. Furthermore, a robust industry rank (among the Top 23%) investor confidence. However, it is hard to get too excited about this company overall as over the past six months, its industry has underperformed the broader market, as you can see below:
So, value investors might want to wait analysts’ sentiment and estimates to turn around in this name first, but once that happens, this stock could be a compelling pick.
One Simple Trading Idea
Since 1988, the Zacks system has more than doubled the S&P 500 with an average gain of +25% per year. With compounding, rebalancing, and exclusive of fees, it can turn thousands into millions of dollars.
This proven stock-picking system is grounded on a single big idea that can be fortune shaping and life changing. You can apply it to your portfolio starting today. Learn more >>
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Is Container Store (TCS) 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?
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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 The Container Store Group, Inc. (TCS - Free Report) 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, The Container Store has a trailing twelve months PE ratio of 17.1, 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 stands at about 20. If we focus on the long-term PE trend, The Container Store’s current PE level puts it well below its midpoint over the past three years. Moreover, the current level is significantly below the highs for this stock, suggesting that the stock is undervalued compared to its historical levels.
Further, the stock’s PE also compares favorably with its industry’s trailing twelve months PE ratio, which stands at 18.2. At the very least, this indicates that the stock is relatively undervalued right now, compared to its peers.
We should also point out that The Container Store has a forward PE ratio (price relative to this year’s earnings) of 13.1, so it is fair to say that a slightly more value-oriented path may be ahead for the 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, The Container Store has a P/S ratio of 0.2. This is lower than the S&P 500 average, which comes in at 3.1 right now.
If anything, this suggests some level of undervalued trading—at least compared to historical norms.
Broad Value Outlook
In aggregate, The Container Store 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 The Container Store a solid choice for value investors.
What About the Stock Overall?
Though The Container Store 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 ‘D’. This gives TCS 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 discouraging. The current quarter and year has seen one estimates go higher in the past thirty days compared to one lower.
This has had a noticeable impact on the consensus estimate as the current quarter consensus estimate has dropped by 40% in the past one month, while the current year estimate has decreased by 3.1%. You can see the consensus estimate trend and recent price action for the stock in the chart below:
Container Store (The) Price and Consensus
Container Store (The) Price and Consensus | Container Store (The) Quote
This negative trend is why the stock has just a Zacks Rank #3 (Hold) despite strong value metrics and why we are looking for in-line performance from the company in the near term.
Bottom Line
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The Container Store is an inspired choice for value investors, as it is hard to beat its incredible lineup of statistics on this front. Furthermore, a robust industry rank (among the Top 23%) investor confidence. However, it is hard to get too excited about this company overall as over the past six months, its industry has underperformed the broader market, as you can see below:
So, value investors might want to wait analysts’ sentiment and estimates to turn around in this name first, but once that happens, this stock could be a compelling pick.
One Simple Trading Idea
Since 1988, the Zacks system has more than doubled the S&P 500 with an average gain of +25% per year. With compounding, rebalancing, and exclusive of fees, it can turn thousands into millions of dollars.
This proven stock-picking system is grounded on a single big idea that can be fortune shaping and life changing. You can apply it to your portfolio starting today.
Learn more >>