Should Value Investors Buy Guess (GES) Stock?
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, perhaps no stock market trend is more popular than value investing, which is a strategy that has proven to be successful in all sorts of market environments. Value investors use a variety of methods, including tried-and-true valuation metrics, to find these stocks.
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 stock to keep an eye on is Guess (GES). GES is currently sporting a Zacks Rank #2 (Buy), as well as an A grade for Value. The stock is trading with a P/E ratio of 9.8, which compares to its industry's average of 11.54. GES's Forward P/E has been as high as 10.47 and as low as 3.90, with a median of 6.21, all within the past year.
Value investors also use the P/S ratio. The P/S ratio 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. GES has a P/S ratio of 0.28. This compares to its industry's average P/S of 0.69.
Finally, we should also recognize that GES has a P/CF ratio of 8.12. 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 stock's P/CF looks attractive against its industry's average P/CF of 21.09. GES's P/CF has been as high as 8.19 and as low as 4.37, with a median of 6.26, all within the past year.
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.
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Guess?, Inc. (GES): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).
Source Zacks-com
