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Is Chico's FAS (CHS) Stock Undervalued Right Now?

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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, perhaps no stock market trend is more popular than value investing, which is a strategy that has proven to be successful in all sorts of market environments. Value investors use tried-and-true metrics and fundamental analysis to find companies that they believe are undervalued at their current share price levels.

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.

Chico's FAS (CHS - Free Report) is a stock many investors are watching right now. CHS is currently sporting a Zacks Rank of #2 (Buy), as well as a Value grade of A. The stock is trading with a P/E ratio of 11.86, which compares to its industry's average of 16.07. Over the past year, CHS's Forward P/E has been as high as 15.31 and as low as 9.04, with a median of 12.30.

We also note that CHS holds a PEG ratio of 1.19. 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. CHS's PEG compares to its industry's average PEG of 1.37. CHS's PEG has been as high as 1.53 and as low as 0.80, with a median of 1.17, all within the past year.

Another valuation metric that we should highlight is CHS's P/B ratio of 1.51. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. This stock's P/B looks solid versus its industry's average P/B of 4.17. Over the past year, CHS's P/B has been as high as 2.11 and as low as 1.39, with a median of 1.75.

Value investors also love the P/S ratio, which is calculated by simply dividing a stock's price with the company's 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. CHS has a P/S ratio of 0.44. This compares to its industry's average P/S of 0.65.

Finally, our model also underscores that CHS has a P/CF ratio of 5.26. 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 8.69. Over the past year, CHS's P/CF has been as high as 7.10 and as low as 4.84, with a median of 5.87.

These figures are just a handful of the metrics value investors tend to look at, but they help show that Chico's FAS is likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, CHS feels like a great value stock at the moment.




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