Are Investors Undervaluing Guess (GES) Right Now?

This story originally appeared on Zacks

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.

Looking at the history of these trends, perhaps none is more beloved than value investing. This strategy simply looks to identify companies that are being undervalued by the broader market. 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.

Guess (GES) is a stock many investors are watching right now. GES is currently sporting a Zacks Rank of #1 (Strong Buy) and an A for Value. The stock has a Forward P/E ratio of 6.95. This compares to its industry’s average Forward P/E of 17.76. Over the past year, GES’s Forward P/E has been as high as 19.39 and as low as -35.77, with a median of 15.23.

Value investors also use the P/S ratio. The P/S ratio is is calculated as price divided by sales. This is a prefered metric because revenue can’t really be manipulated, so sales are often a truer performance indicator. GES has a P/S ratio of 0.54. This compares to its industry’s average P/S of 0.85.

Value investors will likely look at more than just these metrics, but the above data helps show that Guess is likely undervalued currently. And when considering the strength of its earnings outlook, GES sticks out at as one of the market’s strongest value stocks.

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