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Are Investors Undervaluing These Retail-Wholesale Stocks Right Now?

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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.

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.

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 Ethan Allen Interiors Inc. (ETD - Free Report) . ETD is currently sporting a Zacks Rank of #1 (Strong Buy), as well as an A grade for Value. The stock is trading with P/E ratio of 8.33 right now. For comparison, its industry sports an average P/E of 13.31. ETD's Forward P/E has been as high as 18.05 and as low as 7.35, with a median of 11.25, all within the past year.

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. ETD has a P/S ratio of 0.88. This compares to its industry's average P/S of 1.16.

Finally, investors will want to recognize that ETD has a P/CF ratio of 7.41. This metric takes into account a company's operating cash flow and can be used to find stocks that are undervalued based on their solid cash outlook. This company's current P/CF looks solid when compared to its industry's average P/CF of 20.62. ETD's P/CF has been as high as 24.16 and as low as 6.55, with a median of 15.10, all within the past year.

Another great Retail - Home Furnishings stock you could consider is Tempur Sealy International (TPX - Free Report) , which is a # 2 (Buy) stock with a Value Score of A.

Tempur Sealy International is trading at a forward earnings multiple of 12.20 at the moment, with a PEG ratio of 0.51. This compares to its industry's average P/E of 13.31 and average PEG ratio of 0.61.

TPX's price-to-earnings ratio has been as high as 16.25 and as low as 11.20, with a median of 13.43, while its PEG ratio has been as high as 0.88 and as low as 0.34, with a median of 0.61, all within the past year.

Tempur Sealy International sports a P/B ratio of 24.63 as well; this compares to its industry's price-to-book ratio of 8.05. In the past 52 weeks, TPX's P/B has been as high as 25.76, as low as 10.80, with a median of 22.77.

These figures are just a handful of the metrics value investors tend to look at, but they help show that Ethan Allen Interiors Inc. and Tempur Sealy International are likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, ETD and TPX feels like a great value stock at the moment.


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Tempur Sealy International, Inc. (TPX) - free report >>

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