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Should Value Investors Buy Vipshop Holdings Limited (VIPS) Stock?

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Here at Zacks, we focus on our proven ranking system, which places an emphasis on earnings estimates and estimate revisions, to find winning stocks. But we also understand that investors develop their own strategies, so we are constantly looking at the latest trends in value, growth, and momentum to find strong companies for our readers.

Considering these trends, value investing is clearly one of the most preferred ways to find strong stocks in any type of market. Value investors use a variety of methods, including tried-and-true valuation metrics, to find these stocks.

Luckily, Zacks has developed its own Style Scores system in an effort to find stocks with specific traits. Value investors will be interested in the system's "Value" category. Stocks with both "A" grades in the Value category and high Zacks Ranks are among the strongest value stocks on the market right now.

One company value investors might notice is Vipshop Holdings Limited (VIPS - Free Report) . VIPS is currently sporting a Zacks Rank of #2 (Buy), as well as a Value grade of A.

We should also highlight that VIPS has a P/B ratio of 2.30. 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. VIPS's current P/B looks attractive when compared to its industry's average P/B of 4.71. Within the past 52 weeks, VIPS's P/B has been as high as 4.37 and as low as 1.24, with a median of 1.94.

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. VIPS has a P/S ratio of 0.45. This compares to its industry's average P/S of 1.2.

Finally, we should also recognize that VIPS has a P/CF ratio of 13.96. 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. VIPS's current P/CF looks attractive when compared to its industry's average P/CF of 35.50. Over the past 52 weeks, VIPS's P/CF has been as high as 23.60 and as low as 5.97, with a median of 11.53.

These are only a few of the key metrics included in Vipshop Holdings Limited's strong Value grade, but they help show that the stock is likely undervalued right now. When factoring in the strength of its earnings outlook, VIPS looks like an impressive value stock at the moment.


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