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Are Investors Undervaluing Vista Outdoor (VSTO) 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. Nevertheless, we are always paying attention to...

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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.

- Zacks

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 a variety of methods, including tried-and-true valuation metrics, to find these stocks.

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 Vista Outdoor (VSTO). VSTO is currently sporting a Zacks Rank of #2 (Buy) and an A for Value.

Value investors also use the P/S ratio. The P/S ratio is 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. VSTO has a P/S ratio of 0.98. This compares to its industry's average P/S of 1.65.

Finally, our model also underscores that VSTO has a P/CF ratio of 6.21. This metric focuses on a firm's operating cash flow and is often used to find stocks that are undervalued based on the strength of their cash outlook. VSTO's current P/CF looks attractive when compared to its industry's average P/CF of 22.34. Within the past 12 months, VSTO's P/CF has been as high as 8.22 and as low as 5.10, with a median of 6.27.

These figures are just a handful of the metrics value investors tend to look at, but they help show that Vista Outdoor is likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, VSTO feels like a great value stock at the moment.



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