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Should Value Investors Buy Zumiez (ZUMZ) Stock?

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Here at Zacks, our focus is on the proven Zacks Rank system, which emphasizes earnings estimates and estimate revisions to find great stocks. Nevertheless, we are always paying attention to the latest value, growth, and momentum trends to underscore strong picks.

Of these, perhaps no stock market trend is more popular than value investing, which is a strategy that has proven to be successful in all sorts of market environments. Value investors use tried-and-true metrics and fundamental analysis to find companies that they believe are undervalued at their current share price levels.

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 to watch right now is Zumiez (ZUMZ - Free Report) . ZUMZ is currently sporting a Zacks Rank of #1 (Strong Buy), as well as a Value grade of A. The stock is trading with a P/E ratio of 14.87, which compares to its industry's average of 14.96. Over the past 52 weeks, ZUMZ's Forward P/E has been as high as 19.45 and as low as 12.30, with a median of 15.68.

ZUMZ is also sporting a PEG ratio of 0.90. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. ZUMZ's industry has an average PEG of 1.35 right now. Over the last 12 months, ZUMZ's PEG has been as high as 1.08 and as low as 0.68, with a median of 0.87.

Investors should also recognize that ZUMZ has a P/B ratio of 1.94. The P/B ratio is used to compare a stock's market value with 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 4.47. Within the past 52 weeks, ZUMZ's P/B has been as high as 2.24 and as low as 1.32, with a median of 1.68.

Value investors will likely look at more than just these metrics, but the above data helps show that Zumiez is likely undervalued currently. And when considering the strength of its earnings outlook, ZUMZ sticks out at as one of the market's strongest value stocks.


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