Should Value Investors Buy Chico's FAS (CHS) Stock?

SPWH

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.

Of these, value investing is easily one of the most popular ways to find great stocks in any market environment. Value investors use a variety of methods, including tried-and-true valuation metrics, to find these stocks.

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 Chico's FAS . CHS is currently sporting a Zacks Rank of #1 (Strong Buy) and an A for Value. The stock holds a P/E ratio of 6.88, while its industry has an average P/E of 12.70. Over the past year, CHS's Forward P/E has been as high as 18.56 and as low as 4.98, with a median of 9.27.

Another valuation metric that we should highlight is CHS's P/B ratio of 2.69. 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 stock's P/B looks attractive against its industry's average P/B of 2.95. Over the past 12 months, CHS's P/B has been as high as 4.22 and as low as 1.92, with a median of 2.61.

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. CHS has a P/S ratio of 0.36. This compares to its industry's average P/S of 0.4.

Finally, we should also recognize that CHS has a P/CF ratio of 5.19. This metric focuses on a firm's operating cash flow and is often used to find stocks that are undervalued based on the strength of their cash outlook. CHS's current P/CF looks attractive when compared to its industry's average P/CF of 6.83. Within the past 12 months, CHS's P/CF has been as high as 72.75 and as low as 3.48, with a median of 5.24.

If you're looking for another solid Retail - Apparel and Shoes value stock, take a look at Sportsman's Warehouse (SPWH - Free Report) . SPWH is a # 2 (Buy) stock with a Value score of A.

Additionally, Sportsman's Warehouse has a P/B ratio of 1.37 while its industry's price-to-book ratio sits at 2.95. For SPWH, this valuation metric has been as high as 3.01, as low as 1.20, with a median of 1.45 over the past year.

These are just a handful of the figures considered in Chico's FAS and Sportsman's Warehouse's great Value grade. Still, they help show that the stock is likely being undervalued at the moment. Add this to the strength of its earnings outlook, and we can clearly see that CHS and SPWH is an impressive value stock right now.

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