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Are Investors Undervaluing Citi Trends (CTRN) Right Now?

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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.

On top of the Zacks Rank, investors can also look at our innovative Style Scores system to find stocks with specific traits. For example, value investors will want to focus on the "Value" category. Stocks with high Zacks Ranks and "A" grades for Value will be some of the highest-quality value stocks on the market today.

One company value investors might notice is Citi Trends (CTRN - Free Report) . CTRN is currently sporting a Zacks Rank of #1 (Strong Buy) and an A for Value. The stock holds a P/E ratio of 11.56, while its industry has an average P/E of 15.80. Over the past 52 weeks, CTRN's Forward P/E has been as high as 35.21 and as low as 11.56, with a median of 17.73.

Another valuation metric that we should highlight is CTRN's P/B ratio of 4.97. 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 solid versus its industry's average P/B of 6.12. Over the past 12 months, CTRN's P/B has been as high as 6.73 and as low as 1.48, with a median of 4.83.

Value investors also frequently use the P/S ratio. This metric is found by dividing a stock's price with the company's revenue. This is a popular metric because sales are harder to manipulate on an income statement, so they are often considered a better performance indicator. CTRN has a P/S ratio of 0.69. This compares to its industry's average P/S of 0.71.

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


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