Should Value Investors Buy Vipshop (VIPS) Stock?
Here at Zacks, we focus on our proven ranking system, which places an emphasis on earnings estimates and estimate revisions, to find winning stocks. But we also understand that investors develop their own strategies, so we are constantly looking at the latest trends in value, growth, and momentum to find strong companies for our readers.
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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 tried-and-true metrics and fundamental analysis to find companies that they believe are undervalued at their current share price levels.
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.
Vipshop (VIPS) is a stock many investors are watching right now. VIPS is currently holding a Zacks Rank of #2 (Buy) and a Value grade of A.
Value investors also frequently use the P/S ratio. This metric is found by dividing a stock's price with the company's revenue. This is a popular metric because sales are harder to manipulate on an income statement, so they are often considered a better performance indicator. VIPS has a P/S ratio of 0.49. This compares to its industry's average P/S of 0.66.
Finally, investors should note that VIPS has a P/CF ratio of 5.76. 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 20.38. Over the past year, VIPS's P/CF has been as high as 7.09 and as low as 4.63, with a median of 5.56.
These are only a few of the key metrics included in Vipshop'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, VIPS looks like an impressive value stock at the moment.
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Vipshop Holdings Limited (VIPS) : Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).