Is Sally Beauty (SBH) a Great Value Stock 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 the latest value, growth, and momentum trends to underscore strong picks.
Of these, value investing is easily one of the most popular ways to find great stocks in any market environment. Value investors use fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.
Zacks has developed the innovative Style Scores system to highlight stocks with specific traits. For example, value investors will be interested in stocks with great grades in the "Value" category. When paired with a high Zacks Rank, "A" grades in the Value category are among the strongest value stocks on the market today.
One company to watch right now is Sally Beauty (SBH). SBH is currently sporting a Zacks Rank of #2 (Buy), as well as a Value grade of A.
Investors should also note that SBH holds a PEG ratio of 1.12. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. SBH's industry has an average PEG of 2.67 right now. Over the past 52 weeks, SBH's PEG has been as high as 3.15 and as low as 0.68, with a median of 1.70.
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. SBH has a P/S ratio of 0.3. This compares to its industry's average P/S of 0.5.
Finally, we should also recognize that SBH has a P/CF ratio of 4.67. 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. SBH's current P/CF looks attractive when compared to its industry's average P/CF of 14.79. Within the past 12 months, SBH's P/CF has been as high as 7.21 and as low as 2.47, with a median of 4.98.
These are only a few of the key metrics included in Sally Beauty's strong Value grade, but they help show that the stock is likely undervalued right now. When factoring in the strength of its earnings outlook, SBH looks like an impressive value stock at the moment.
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Sally Beauty Holdings, Inc. (SBH) : Free Stock Analysis Report
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