Is Sally Beauty (SBH) Stock Undervalued Right Now?
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.
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.
Luckily, Zacks has developed its own Style Scores system in an effort to find stocks with specific traits. Value investors will be interested in the system's "Value" category. Stocks with both "A" grades in the Value category and high Zacks Ranks are among the strongest value stocks on the market right now.
One company value investors might notice is Sally Beauty (SBH). SBH is currently sporting a Zacks Rank #2 (Buy) and an A for Value. The stock has a Forward P/E ratio of 7.76. This compares to its industry's average Forward P/E of 15.06. SBH's Forward P/E has been as high as 8.12 and as low as 4.04, with a median of 5.53, all within the past year.
Value investors also frequently use the P/S ratio. This metric is found by dividing a stock's price with the company's revenue. Some people prefer this metric because sales are harder to manipulate on an income statement. This means it could be a truer performance indicator. SBH has a P/S ratio of 0.39. This compares to its industry's average P/S of 0.55.
These are only a few of the key metrics included in Sally Beauty'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, SBH looks like an impressive value stock at the moment.
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Sally Beauty Holdings, Inc. (SBH): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).
Source Zacks-com
