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Are Investors Undervaluing Delta Apparel (DLA) 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

While the proven Zacks Rank places an emphasis on earnings estimates and estimate revisions to find strong stocks, we also know that investors tend to develop their own individual strategies. With this in mind, we are always looking at value, growth, and momentum trends to discover great companies.

- Zacks

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 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 stock to keep an eye on is Delta Apparel (DLA). DLA is currently sporting a Zacks Rank of #2 (Buy), as well as a Value grade of A. The stock has a Forward P/E ratio of 9.07. This compares to its industry's average Forward P/E of 19.52. Over the last 12 months, DLA's Forward P/E has been as high as 17.09 and as low as 8.22, with a median of 13.57.

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. DLA has a P/S ratio of 0.43. This compares to its industry's average P/S of 0.89.

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



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