Value investing is easily one of the most popular ways to find great stocks in any market environment. After all, who wouldn’t want to find stocks that are either flying under the radar and are compelling buys, or offer up tantalizing discounts when compared to fair value?
One way to find these companies is by looking at several key metrics and financial ratios, many of which are crucial in the value stock selection process. Let’s put Veritiv Corporation stock into this equation and find out if it is a good choice for value-oriented investors right now, or if investors subscribing to this methodology should look elsewhere for top picks:
PE Ratio
A key metric that value investors always look at is the Price to Earnings Ratio, or PE for short. This shows us how much investors are willing to pay for each dollar of earnings in a given stock, and is easily one of the most popular financial ratios in the world. The best use of the PE ratio is to compare the stock’s current PE ratio with: a) where this ratio has been in the past; b) how it compares to the average for the industry/sector; and c) how it compares to the market as a whole.
On this front, Veritiv Corporation has a trailing twelve months PE ratio of 8.62, as you can see in the chart below:
Image Source: Zacks Investment Research
This level actually compares pretty favorably with the market at large, as the PE for the S&P 500 stands at about 17.35. If we focus on the long-term PE trend, Veritiv Corporation’s current PE level puts it below its midpoint over the past five years. Moreover, the current level is fairly below the highs for this stock, suggesting it might be a good entry point.
Image Source: Zacks Investment Research
However, the stock’s PE compares unfavorably with the sector’s trailing twelve months PE ratio, which stands at 7.18. This indicates that the stock is relatively overvalued right now, compared to its peers.
Image Source: Zacks Investment Research
Nevertheless, we should point out that Veritiv Corporation has a forward PE ratio (price relative to this year’s earnings) of just 6.09, so it is fair to say that a slightly more value-oriented path may be ahead for Veritiv Corporation stock in the near term.
P/S Ratio
Another key metric to note is the Price/Sales ratio. This approach compares a given stock’s price to its total sales, where a lower reading is generally considered better. Some people like this metric more than other value-focused ones because it looks at sales, something that is far harder to manipulate with accounting tricks than earnings.
Right now, Veritiv Corporation has a P/S ratio of about 0.24. This is lower than the S&P 500 average, which comes in at 3.39 right now. As we can see in the chart below, this is above the median for this stock in particular over the past few years.
Image Source: Zacks Investment Research
VRTV is actually in the higher zone of its trading range in the time period per the P/S metric, which suggests that the company’s stock price has already appreciated to some degree, relative to its sales.
Broad Value Outlook
In aggregate, Veritiv Corporation currently has a Zacks Value Style Score of B, putting it into the top 40% of all stocks we cover from this look. This makes Veritiv Corporation a solid choice for value investors.
What About the Stock Overall?
Though Veritiv Corporation might be a good choice for value investors, there are plenty of other factors to consider before investing in this name. In particular, it is worth noting that the company has a Growth grade of D and a Momentum score of B. This gives VRTV a Zacks VGM score—or its overarching fundamental grade—of B. (You can read more about the Zacks Style Scores here >>)
Meanwhile, the company’s recent earnings estimates have been encouraging. The current year as well as the next year has seen one estimate go higher in the past sixty days compared to none lower.
As a result, the current year consensus estimate has risen by 25.2% in the past two months, while the next year estimate has increased 4.5%. You can see the consensus estimate trend and recent price action for the stock in the chart below:
This favorable trend is why the stock has a Zacks Rank #2 (Buy) and why we are looking for outperformance from the company in the near term.
Bottom Line
Veritiv Corporation is an inspired choice for value investors, as it is hard to beat its incredible lineup of statistics on this front. With a formidable industry rank (among the Top 12%) and strong Zacks Rank, Veritiv Corporation looks like a strong value contender. In fact, over the past two years, the industry has clearly outperformed the broader market, as you can see below:
Image Source: Zacks Investment Research
So, it might pay for value investors to delve deeper into the company’s prospects, as fundamentals indicate that this stock could be a compelling pick.
Image: Bigstock
Is Veritiv Corporation (VRTV) a Good Stock for Value Investors?
Value investing is easily one of the most popular ways to find great stocks in any market environment. After all, who wouldn’t want to find stocks that are either flying under the radar and are compelling buys, or offer up tantalizing discounts when compared to fair value?
One way to find these companies is by looking at several key metrics and financial ratios, many of which are crucial in the value stock selection process. Let’s put Veritiv Corporation stock into this equation and find out if it is a good choice for value-oriented investors right now, or if investors subscribing to this methodology should look elsewhere for top picks:
PE Ratio
A key metric that value investors always look at is the Price to Earnings Ratio, or PE for short. This shows us how much investors are willing to pay for each dollar of earnings in a given stock, and is easily one of the most popular financial ratios in the world. The best use of the PE ratio is to compare the stock’s current PE ratio with: a) where this ratio has been in the past; b) how it compares to the average for the industry/sector; and c) how it compares to the market as a whole.
On this front, Veritiv Corporation has a trailing twelve months PE ratio of 8.62, as you can see in the chart below:
Image Source: Zacks Investment Research
This level actually compares pretty favorably with the market at large, as the PE for the S&P 500 stands at about 17.35. If we focus on the long-term PE trend, Veritiv Corporation’s current PE level puts it below its midpoint over the past five years. Moreover, the current level is fairly below the highs for this stock, suggesting it might be a good entry point.
Image Source: Zacks Investment Research
However, the stock’s PE compares unfavorably with the sector’s trailing twelve months PE ratio, which stands at 7.18. This indicates that the stock is relatively overvalued right now, compared to its peers.
Image Source: Zacks Investment Research
Nevertheless, we should point out that Veritiv Corporation has a forward PE ratio (price relative to this year’s earnings) of just 6.09, so it is fair to say that a slightly more value-oriented path may be ahead for Veritiv Corporation stock in the near term.
P/S Ratio
Another key metric to note is the Price/Sales ratio. This approach compares a given stock’s price to its total sales, where a lower reading is generally considered better. Some people like this metric more than other value-focused ones because it looks at sales, something that is far harder to manipulate with accounting tricks than earnings.
Right now, Veritiv Corporation has a P/S ratio of about 0.24. This is lower than the S&P 500 average, which comes in at 3.39 right now. As we can see in the chart below, this is above the median for this stock in particular over the past few years.
Image Source: Zacks Investment Research
VRTV is actually in the higher zone of its trading range in the time period per the P/S metric, which suggests that the company’s stock price has already appreciated to some degree, relative to its sales.
Broad Value Outlook
In aggregate, Veritiv Corporation currently has a Zacks Value Style Score of B, putting it into the top 40% of all stocks we cover from this look. This makes Veritiv Corporation a solid choice for value investors.
What About the Stock Overall?
Though Veritiv Corporation might be a good choice for value investors, there are plenty of other factors to consider before investing in this name. In particular, it is worth noting that the company has a Growth grade of D and a Momentum score of B. This gives VRTV a Zacks VGM score—or its overarching fundamental grade—of B. (You can read more about the Zacks Style Scores here >>)
Meanwhile, the company’s recent earnings estimates have been encouraging. The current year as well as the next year has seen one estimate go higher in the past sixty days compared to none lower.
As a result, the current year consensus estimate has risen by 25.2% in the past two months, while the next year estimate has increased 4.5%. You can see the consensus estimate trend and recent price action for the stock in the chart below:
Veritiv Corporation Price and Consensus
Veritiv Corporation price-consensus-chart | Veritiv Corporation Quote
This favorable trend is why the stock has a Zacks Rank #2 (Buy) and why we are looking for outperformance from the company in the near term.
Bottom Line
Veritiv Corporation is an inspired choice for value investors, as it is hard to beat its incredible lineup of statistics on this front. With a formidable industry rank (among the Top 12%) and strong Zacks Rank, Veritiv Corporation looks like a strong value contender. In fact, over the past two years, the industry has clearly outperformed the broader market, as you can see below:
Image Source: Zacks Investment Research
So, it might pay for value investors to delve deeper into the company’s prospects, as fundamentals indicate that this stock could be a compelling pick.