Back to top

Image: Bigstock

Are Investors Undervaluing GMS Inc. (GMS) Right Now?

Read MoreHide Full Article

The proven Zacks Rank system focuses on earnings estimates and estimate revisions to find winning stocks. Nevertheless, we know that our readers all have their own perspectives, so we are always looking at the latest trends in value, growth, and momentum to find strong picks.

Of these, value investing is easily one of the most popular ways to find great stocks in any market environment. Value investors rely on traditional forms of analysis on key valuation metrics to find stocks that they believe are undervalued, leaving room for profits.

On top of the Zacks Rank, investors can also look at our innovative Style Scores system to find stocks with specific traits. For example, value investors will want to focus on the "Value" category. Stocks with high Zacks Ranks and "A" grades for Value will be some of the highest-quality value stocks on the market today.

One stock to keep an eye on is GMS Inc. (GMS - Free Report) . GMS is currently holding a Zacks Rank of #2 (Buy) and a Value grade of A.

Investors should also note that GMS holds a PEG ratio of 0.89. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. GMS's industry has an average PEG of 1.63 right now. Within the past year, GMS's PEG has been as high as 1.39 and as low as 0.67, with a median of 1.06.

Value investors also use the P/S ratio. The P/S ratio is is calculated as price divided by sales. Some people prefer this metric because sales are harder to manipulate on an income statement. This means it could be a truer performance indicator. GMS has a P/S ratio of 0.25. This compares to its industry's average P/S of 0.37.

Finally, we should also recognize that GMS has a P/CF ratio of 4.42. This data point considers a firm's operating cash flow and is frequently used to find companies that are undervalued when considering their solid cash outlook. This company's current P/CF looks solid when compared to its industry's average P/CF of 14.42. Within the past 12 months, GMS's P/CF has been as high as 6.85 and as low as 3.90, with a median of 5.33.

These are just a handful of the figures considered in GMS Inc.'s great Value grade. Still, they help show that the stock is likely being undervalued at the moment. Add this to the strength of its earnings outlook, and we can clearly see that GMS is an impressive value stock right now.


In-Depth Zacks Research for the Tickers Above


Normally $25 each - click below to receive one report FREE:


GMS Inc. (GMS) - free report >>

Published in