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Should Value Investors Buy Vipshop (VIPS) Stock?

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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, 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.

In addition to the Zacks Rank, investors looking for stocks with specific traits can utilize our Style Scores system. Of course, value investors will be most interested in the system's "Value" category. Stocks with "A" grades for Value and high Zacks Ranks are among the best value stocks available at any given moment.

Vipshop (VIPS - Free Report) is a stock many investors are watching right now. VIPS is currently holding a Zacks Rank #2 (Buy) and a Value grade of A. The stock is trading with a P/E ratio of 6.82, which compares to its industry's average of 17.63. Over the last 12 months, VIPS's Forward P/E has been as high as 7.28 and as low as 4.83, with a median of 5.83.

Investors will also notice that VIPS has a PEG ratio of 1.58. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. VIPS's PEG compares to its industry's average PEG of 2.47. Over the last 12 months, VIPS's PEG has been as high as 2.29 and as low as 1.14, with a median of 1.42.

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. VIPS has a P/S ratio of 0.59. This compares to its industry's average P/S of 0.71.

Finally, our model also underscores that VIPS has a P/CF ratio of 7.41. 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. VIPS's P/CF compares to its industry's average P/CF of 19.44. Over the past 52 weeks, VIPS's P/CF has been as high as 7.44 and as low as 4.91, with a median of 5.89.

These are just a handful of the figures considered in Vipshop'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 VIPS is an impressive value stock right now.


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