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Should Value Investors Buy Citi Trends (CTRN) Stock?
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, value investing is easily one of the most popular ways to find great stocks in any market environment. Value investors rely on traditional forms of analysis on key valuation metrics to find stocks that they believe are undervalued, leaving room for profits.
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 #2 (Buy), as well as a Value grade of A.
We should also highlight that CTRN has a P/B ratio of 1.45. 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 company's current P/B looks solid when compared to its industry's average P/B of 2.78. 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 1.61.
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. CTRN has a P/S ratio of 0.27. This compares to its industry's average P/S of 0.38.
Finally, our model also underscores that CTRN has a P/CF ratio of 2.69. 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 6.41. Within the past 12 months, CTRN's P/CF has been as high as 9.22 and as low as 1.84, with a median of 2.91.
These are just a handful of the figures considered in Citi Trends'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 CTRN is an impressive value stock right now.