Should Value Investors Buy Signet (SIG) Stock?
Here at Zacks, our focus is on the proven Zacks Rank system, which emphasizes earnings estimates and estimate revisions to find great stocks. Neverthe...
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.
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 rely on traditional forms of analysis on key valuation metrics to find stocks that they believe are undervalued, leaving room for profits.
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.
One company value investors might notice is Signet (SIG). SIG is currently sporting a Zacks Rank of #1 (Strong Buy), as well as an A grade for Value.
Another valuation metric that we should highlight is SIG's P/B ratio of 2.91. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. This company's current P/B looks solid when compared to its industry's average P/B of 2.92. Over the past year, SIG's P/B has been as high as 3.22 and as low as 1.03, with a median of 2.34.
Value investors also love the P/S ratio, which is calculated by simply dividing a stock's price with the company's 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. SIG has a P/S ratio of 0.6. This compares to its industry's average P/S of 0.99.
Finally, investors should note that SIG has a P/CF ratio of 6.69. This figure highlights a company's operating cash flow and can be used to find firms that are undervalued when considering their impressive cash outlook. SIG's current P/CF looks attractive when compared to its industry's average P/CF of 10.39. Within the past 12 months, SIG's P/CF has been as high as 26.17 and as low as -13.28, with a median of 6.68.
These figures are just a handful of the metrics value investors tend to look at, but they help show that Signet is likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, SIG feels like a great value stock at the moment.
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Signet Jewelers Limited (SIG): Free Stock Analysis Report
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