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Should Value Investors Buy Guess (GES) Stock?
While the proven Zacks Rank places an emphasis on earnings estimates and estimate revisions to find strong stocks, we also know that investors tend to develop their own individual strategies. With this in mind, we are always looking at value, growth, and momentum trends to discover great companies.
Looking at the history of these trends, perhaps none is more beloved than value investing. This strategy simply looks to identify companies that are being undervalued by the broader market. 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.
Guess (GES - Free Report) is a stock many investors are watching right now. GES is currently holding a Zacks Rank of #1 (Strong Buy) and a Value grade of A. The stock is trading with a P/E ratio of 11.15, which compares to its industry's average of 14.91. Over the past year, GES's Forward P/E has been as high as 17.63 and as low as 9.42, with a median of 14.35.
We also note that GES holds a PEG ratio of 0.64. 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. GES's industry has an average PEG of 1.06 right now. GES's PEG has been as high as 1.01 and as low as 0.54, with a median of 0.82, all within the past year.
Another notable valuation metric for GES is its P/B ratio of 2.19. 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. This company's current P/B looks solid when compared to its industry's average P/B of 5.97. Within the past 52 weeks, GES's P/B has been as high as 2.62 and as low as 1.58, with a median of 2.05.
Value investors also use the P/S ratio. The P/S ratio is is calculated as price divided by sales. This is a prefered metric because revenue can't really be manipulated, so sales are often a truer performance indicator. GES has a P/S ratio of 0.43. This compares to its industry's average P/S of 0.77.
Finally, investors should note that GES has a P/CF ratio of 14. 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. GES's current P/CF looks attractive when compared to its industry's average P/CF of 22.07. Over the past 52 weeks, GES's P/CF has been as high as 32.28 and as low as 10.81, with a median of 19.23.
These are only a few of the key metrics included in Guess's strong Value grade, but they help show that the stock is likely undervalued right now. When factoring in the strength of its earnings outlook, GES looks like an impressive value stock at the moment.