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Is Yirendai (YRD) Stock Undervalued Right Now?

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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 use fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.

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.

One company to watch right now is Yirendai (YRD - Free Report) . YRD is currently sporting a Zacks Rank of #2 (Buy) and an A for Value.

Another valuation metric that we should highlight is YRD's P/B ratio of 1.53. The P/B ratio is used to compare a stock's market value with its book value, which is defined as total assets minus total liabilities. YRD's current P/B looks attractive when compared to its industry's average P/B of 4.40. Over the past 12 months, YRD's P/B has been as high as 2.74 and as low as 0.84, with a median of 1.55.

Finally, we should also recognize that YRD has a P/CF ratio of 5.67. This figure highlights a company's operating cash flow and can be used to find firms that are undervalued when considering their impressive cash outlook. This company's current P/CF looks solid when compared to its industry's average P/CF of 19.25. Over the past year, YRD's P/CF has been as high as 10.12 and as low as 3.66, with a median of 5.99.

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


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