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Is Designer Brands (DBI) a Great Value Stock 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.

Considering these trends, value investing is clearly one of the most preferred ways to find strong stocks in any type of market. Value investors use fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.

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.

Designer Brands (DBI - Free Report) is a stock many investors are watching right now. DBI is currently sporting a Zacks Rank of #2 (Buy), as well as a Value grade of A. The stock has a Forward P/E ratio of 7.76. This compares to its industry's average Forward P/E of 10.72. DBI's Forward P/E has been as high as 15.30 and as low as 6.84, with a median of 11.14, all within the past year.

Investors will also notice that DBI has a PEG ratio of 0.52. 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. DBI's industry currently sports an average PEG of 1.05. Over the past 52 weeks, DBI's PEG has been as high as 1.70 and as low as 0.46, with a median of 1.24.

Investors should also recognize that DBI has a P/B ratio of 1.64. Investors use the P/B ratio to look at a stock's market value versus 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 3.06. Within the past 52 weeks, DBI's P/B has been as high as 2.87 and as low as 1.41, with a median of 2.06.

Value investors also use the P/S ratio. The P/S ratio is is calculated as price divided by 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. DBI has a P/S ratio of 0.35. This compares to its industry's average P/S of 0.5.

Value investors will likely look at more than just these metrics, but the above data helps show that Designer Brands is likely undervalued currently. And when considering the strength of its earnings outlook, DBI sticks out at as one of the market's strongest value stocks.


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