Back to top

Image: Bigstock

Are Investors Undervaluing Vipshop Holdings Limited (VIPS) Right Now?

Read MoreHide Full Article

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, 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.

Vipshop Holdings Limited (VIPS - Free Report) is a stock many investors are watching right now. VIPS is currently sporting a Zacks Rank of #2 (Buy), as well as an A grade for Value. The stock is trading with a P/E ratio of 16.18, which compares to its industry's average of 34.74. Over the past year, VIPS's Forward P/E has been as high as 25.38 and as low as 10.36, with a median of 14.41.

Investors should also recognize that VIPS has a P/B ratio of 4.52. Investors use the P/B ratio to look at a stock's market value versus 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 5.11. Over the past 12 months, VIPS's P/B has been as high as 6.87 and as low as 2.55, with a median of 4.09.

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 1.44. This compares to its industry's average P/S of 2.23.

Finally, investors should note that VIPS has a P/CF ratio of 20.70. This figure highlights a company's operating cash flow and can be used to find firms that are undervalued when considering their impressive cash outlook. This stock's P/CF looks attractive against its industry's average P/CF of 30.95. Within the past 12 months, VIPS's P/CF has been as high as 31.47 and as low as 12.32, with a median of 19.25.

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.

In-Depth Zacks Research for the Tickers Above

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

Vipshop Holdings Limited (VIPS) - free report >>

Published in