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Are Investors Undervaluing Citi Trends (CTRN) Right Now?
While the proven Zacks Rank places an emphasis on earnings estimates and estimate revisions to find strong stocks, we also know that investors tend to develop their own individual strategies. With this in mind, we are always looking at value, growth, and momentum trends to discover great companies.
Looking at the history of these trends, perhaps none is more beloved than value investing. This strategy simply looks to identify companies that are being undervalued by the broader market. Value investors rely on traditional forms of analysis on key valuation metrics to find stocks that they believe are undervalued, leaving room for profits.
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 Citi Trends (CTRN - Free Report) . CTRN is currently sporting a Zacks Rank of #2 (Buy) and an A for Value.
Another notable valuation metric for CTRN is its P/B ratio of 1.85. 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 3.02. Over the past year, CTRN's P/B has been as high as 7.87 and as low as 0.97, with a median of 1.74.
Value investors also use the P/S ratio. The P/S ratio is is calculated as price divided by sales. 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 0.31. This compares to its industry's average P/S of 0.42.
Finally, our model also underscores that CTRN has a P/CF ratio of 3.55. 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. CTRN's current P/CF looks attractive when compared to its industry's average P/CF of 6.97. Over the past year, CTRN's P/CF has been as high as 9.22 and as low as 1.86, with a median of 2.98.
Another great Retail - Apparel and Shoes stock you could consider is Zumiez (ZUMZ - Free Report) , which is a # 2 (Buy) stock with a Value Score of A.
Furthermore, Zumiez holds a P/B ratio of 1.21 and its industry's price-to-book ratio is 3.02. ZUMZ's P/B has been as high as 2.26, as low as 1.05, with a median of 1.63 over the past 12 months.
Value investors will likely look at more than just these metrics, but the above data helps show that Citi Trends and Zumiez are likely undervalued currently. And when considering the strength of its earnings outlook, CTRN and ZUMZ sticks out as one of the market's strongest value stocks.