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 HSN, Inc. 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, HSN has a trailing twelve months PE ratio of 16.2, as you can see in the chart below:
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This level actually compares pretty favorably with the market at large, as the PE for the S&P 500 compares in at about 20.2. If we focus on the stock’s long-term PE trend, the current level puts HSN’s current PE ratio below its midpoint over the past five years. Moreover, the current level is fairly below the highs for this stock, suggesting it might be a good entry point.
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Further, the stock’s PE also compares favorably with the sector’s trailing twelve months PE ratio, which stands at 27.6. At the very least, this indicates that the stock is relatively undervalued right now, compared to its peers.
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We should also point out that HSN has a forward PE ratio (price relative to this year’s earnings) of 15.3, 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, HSN has a P/S ratio of about 0.6. This is much lower than the S&P 500 average, which comes in at 3.2 right now. Also, as we can see in the chart below, this is well below the highs for this stock in particular over the past few years.
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If anything, HSNI is in the lower end of its range in the time period from a P/S metric, suggesting some level of undervalued trading—at least compared to historical norms.
Broad Value Outlook
In aggregate, HSN 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 HSN a solid choice for value investors.
What About the Stock Overall?
Though HSN 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 ‘A’ and a Momentum score of ‘B’. This gives HSNI a Zacks VGM score—or its overarching fundamental grade—of ‘A’. (You can read more about the Zacks Style Scores here >>)
Meanwhile, the company’s recent earnings estimates have been going down. The current quarter has seen no estimates go higher or lower in the past sixty days, while the full year estimate has seen no up and one down in the same time period.
This has had a significant impact on the consensus estimate though as the current quarter consensus estimate has fallen by 4.7% in the past two months, while the full year estimate has declined by 2%. You can see the consensus estimate trend and recent price action for the stock in the chart below:
HSN, Inc. Price and Consensus
This negative trend is why the stock has just a Zacks Rank #3 (Hold) and why we are looking for in-line performance from the company in the near term.
Bottom Line
HSN 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 40%) instills investor confidence. In fact, over the past two years, the industry to which it belongs has clearly underperformed the broader market, as you can see below:
.jpg)
So, value investors might want to wait for estimates and analyst sentiment to turn around in this name first, but once that happens, this stock could be a compelling pick.
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Will HSN, Inc. (HSNI) Make a Suitable Value Pick Right Now?
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 HSN, Inc. 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, HSN has a trailing twelve months PE ratio of 16.2, 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 20.2. If we focus on the stock’s long-term PE trend, the current level puts HSN’s current PE ratio below its midpoint over the past five years. Moreover, the current level is fairly below the highs for this stock, suggesting it might be a good entry point.
Further, the stock’s PE also compares favorably with the sector’s trailing twelve months PE ratio, which stands at 27.6. At the very least, this indicates that the stock is relatively undervalued right now, compared to its peers.
We should also point out that HSN has a forward PE ratio (price relative to this year’s earnings) of 15.3, 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, HSN has a P/S ratio of about 0.6. This is much lower than the S&P 500 average, which comes in at 3.2 right now. Also, as we can see in the chart below, this is well below the highs for this stock in particular over the past few years.
If anything, HSNI is in the lower end of its range in the time period from a P/S metric, suggesting some level of undervalued trading—at least compared to historical norms.
Broad Value Outlook
In aggregate, HSN 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 HSN a solid choice for value investors.
What About the Stock Overall?
Though HSN 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 ‘A’ and a Momentum score of ‘B’. This gives HSNI a Zacks VGM score—or its overarching fundamental grade—of ‘A’. (You can read more about the Zacks Style Scores here >>)
Meanwhile, the company’s recent earnings estimates have been going down. The current quarter has seen no estimates go higher or lower in the past sixty days, while the full year estimate has seen no up and one down in the same time period.
This has had a significant impact on the consensus estimate though as the current quarter consensus estimate has fallen by 4.7% in the past two months, while the full year estimate has declined by 2%. You can see the consensus estimate trend and recent price action for the stock in the chart below:
HSN, Inc. Price and Consensus
HSN, Inc. Price and Consensus | HSN, Inc. Quote
This negative trend is why the stock has just a Zacks Rank #3 (Hold) and why we are looking for in-line performance from the company in the near term.
.jpg)
Bottom Line
HSN 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 40%) instills investor confidence. In fact, over the past two years, the industry to which it belongs has clearly underperformed the broader market, as you can see below:
So, value investors might want to wait for estimates and analyst sentiment to turn around in this name first, but once that happens, this stock could be a compelling pick.
More Stock News: This Is Bigger than the iPhone!
It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.
Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2020.
Click here for the 6 trades >>