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 Kirin Holdings Co. (KNBWY - Free Report) 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:
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, Kirin Holdings has a trailing twelve months PE ratio of 15.00, as you can see in the chart below:
This level actually compares pretty favorably with the market at large, as the PE for the S&P 500 stands at 19.87. If we focus on the stock’s long-term PE trend, the current level puts Kirin Holdings’ current PE ratio 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.
Further, the stock’s PE also compares favorably with its industry’s trailing twelve months PE ratio, which stands at 35.79. At the very least, this indicates that the stock is relatively undervalued right now, compared to its peers.
We should also point out that Kirin Holdings has a forward PE ratio (price relative to this year’s earnings) of 19.29, so it is fair to expect a slight increase in the company’s share price in the near future.
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, Kirin Holdings has a P/S ratio of about 1.11. This is significantly lower than the S&P 500 average, which comes in at 3.12 right now.
If anything, Kirin Holdings is towards the higher end of its range in the time period from a 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, Kirin Holdings 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 KNBWY a good choice for value investors, and some of its other key metrics make this pretty clear too.
For example, the P/CF ratio (another great indicator of value) comes in at 12.49, which is somewhat better than the industry average of 13.93. Clearly, KNBWY is a good choice on the value front from multiple angles.
What About the Stock Overall?
Though Kirin Holdings 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 ‘B’ and a Momentum score of ‘B’. This gives Kirin Holdings a Zacks VGM score—or its overarching fundamental grade—of ‘A’. (You can read more about the Zacks Style Scores here >>)
Meanwhile, the company’s recent earnings estimates have been encouraging. The current year and next has seen one estimates go higher in the past sixty days, compared to none lower.
This has had a positive impact on the consensus estimate, as the current year consensus estimate has jumped 36.5% in the past two months, while the full year estimate has increased about 4.7%. You can see the consensus estimate trend and recent price action for the stock in the chart below:
Kirin Holdings Co. Price and Consensus
This bullish trend is why the stock boasts a Zacks Rank #1 (Strong Buy) and why we are expecting outperformance from the company in the near term.
Kirin Holdings is an inspired choice for value investors, as it is hard to beat its incredible lineup of statistics on this front. Furthermore, a robust industry rank (among the Top 29%) and a solid Zacks Rank instills investor confidence. In fact, over the past six months, its industry has clearly outperformed the broader market, as you can see below:
Strong past performance of the industry and a good industry rank signals that the stock is likely to benefit from favorable broader factors in the immediate future. Add to this the positive estimate revisions and robust value metrics, and we believe that we have a strong value contender in Kirin Holdings.
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