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Are Investors Undervaluing China Distance (DL) 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 rely on traditional forms of analysis on key valuation metrics to find stocks that they believe are undervalued, leaving room for profits.

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.

One company value investors might notice is China Distance (DL - Free Report) . DL is currently sporting a Zacks Rank of #2 (Buy) and an A for Value.

We also note that DL holds a PEG ratio of 0.56. 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. DL's PEG compares to its industry's average PEG of 1.26. Over the past 52 weeks, DL's PEG has been as high as 0.82 and as low as 0.43, with a median of 0.58.

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. DL has a P/S ratio of 1.19. This compares to its industry's average P/S of 1.24.

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


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