Back to top

Image: Bigstock

Are Investors Undervaluing Sally Beauty (SBH) Right Now?

Read MoreHide Full Article

The proven Zacks Rank system focuses on earnings estimates and estimate revisions to find winning stocks. Nevertheless, we know that our readers all have their own perspectives, so we are always looking at the latest trends in value, growth, and momentum to find strong picks.

Of these, value investing is easily one of the most popular ways to find great stocks in any market environment. 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 value investors might notice is Sally Beauty (SBH - Free Report) . SBH is currently sporting a Zacks Rank of #2 (Buy) and an A for Value. The stock has a Forward P/E ratio of 8.09. This compares to its industry's average Forward P/E of 19.56. Over the past 52 weeks, SBH's Forward P/E has been as high as 10.02 and as low as 3.10, with a median of 6.82.

We also note that SBH holds a PEG ratio of 1.97. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. SBH's PEG compares to its industry's average PEG of 2.73. Over the last 12 months, SBH's PEG has been as high as 3.15 and as low as 0.68, with a median of 1.75.

Value investors also use the P/S ratio. The P/S ratio is is calculated as price divided by sales. Some people prefer this metric because sales are harder to manipulate on an income statement. This means it could be a truer performance indicator. SBH has a P/S ratio of 0.29. This compares to its industry's average P/S of 0.43.

Finally, investors should note that SBH has a P/CF ratio of 4.66. 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. This company's current P/CF looks solid when compared to its industry's average P/CF of 14.79. Over the past 52 weeks, SBH's P/CF has been as high as 7.21 and as low as 2.47, with a median of 4.98.

These are just a handful of the figures considered in Sally Beauty'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 SBH is an impressive value stock right now.


See More Zacks Research for These Tickers


Normally $25 each - click below to receive one report FREE:


Sally Beauty Holdings, Inc. (SBH) - free report >>

Published in