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 Express, Inc. (EXPR - 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, Express has a trailing twelve months PE ratio of 18.9, 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 about 20.2. If we focus on the long-term PE trend, Express’ current PE level puts it above its midpoint over the past five years.
However, the stock’s PE also compares unfavorably with the industry’s trailing twelve months PE ratio, which stands at 11.4. At the very least, this indicates that the stock is relatively overvalued right now, compared to its peers.
We should also point out that Express has a forward PE ratio (price relative to this year’s earnings) of just 13.3, so it is fair to say that a slightly more value-oriented path may be ahead for Express stock in the near term too.
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.
If anything, this suggests some level of undervalued trading—at least compared to historical norms.
Broad Value Outlook
In aggregate, Express currently has a Value Score of A, putting it into the top 20% of all stocks we cover from this look. This makes Express a solid choice for value investors, and some of its other key metrics make this pretty clear too.
For example, the P/CF ratio comes in at 3.1, which is far better than the industry average of 6.6. Clearly, EXPR is a solid choice on the value front from multiple angles.
What About the Stock Overall?
Though Express 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 Score of B and a Momentum Score of A. This gives EXPR a VGM score — or its overarching fundamental grade — of A. (You can read more about the Style Scores here >>).
Meanwhile, the company’s recent earnings estimates have been mixed at best. The current quarter has seen no estimates go higher or lower in the past sixty days, while the full year estimate has seen no up and down movement in the same time period.
Despite this, the consensus estimate for the current quarter has declined by 27.3% in the past two months, while the full year estimate has moved up by 2.2%. You can see the consensus estimate trend and recent price action for the stock in the chart below: