Are Investors Undervaluing Citi Trends (CTRN) Right Now?
Here at Zacks, our focus is on the proven Zacks Rank system, which emphasizes earnings estimates and estimate revisions to find great stocks. Neverthe...
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 fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.
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 Citi Trends (CTRN). CTRN is currently holding a Zacks Rank of #1 (Strong Buy) and a Value grade of A. The stock is trading with P/E ratio of 15.53 right now. For comparison, its industry sports an average P/E of 18.31. CTRN's Forward P/E has been as high as 35.21 and as low as 13.07, with a median of 18.62, all within the past year.
Investors should also recognize that CTRN has a P/B ratio of 5.28. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. CTRN's current P/B looks attractive when compared to its industry's average P/B of 6.64. Over the past year, CTRN's P/B has been as high as 6.73 and as low as 1.20, with a median of 4.45.
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. CTRN has a P/S ratio of 0.79. This compares to its industry's average P/S of 0.83.
These are just a handful of the figures considered in Citi Trends's great Value grade. Still, they help show that the stock is likely being undervalued at the moment. Add this to the strength of its earnings outlook, and we can clearly see that CTRN is an impressive value stock right now.
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