Value investing is easily one of the most popular ways to find great stocks in any market environment. After all, who wouldn’t want to find stocks that are either flying under the radar and are compelling buys, or offer up tantalizing discounts when compared to fair value?

One way to find these companies is by looking at several key metrics and financial ratios, many of which are crucial in the value stock selection process. Let’s put Sturm, Ruger & Company, Inc. (RGR Quick QuoteRGR - Free Report) stock into this equation and find out if it is a good choice for value-oriented investors right now, or if investors subscribing to this methodology should look elsewhere for top picks:

PE Ratio

A key metric that value investors always look at is the Price to Earnings Ratio, or PE for short. This shows us how much investors are willing to pay for each dollar of earnings in a given stock, and is easily one of the most popular financial ratios in the world. The best use of the PE ratio is to compare the stock’s current PE ratio with: a) where this ratio has been in the past; b) how it compares to the average for the industry/sector; and c) how it compares to the market as a whole.

On this front, Sturm, Ruger & Company has a trailing twelve months PE ratio of 11.06, as you can see in the chart below:



This level actually compares pretty favorably with the market at large, as the PE for the S&P 500 stands at about 19.84. If we focus on the long-term PE trend, Sturm, Ruger & Company’s current PE level puts it below its midpoint of 14.43 over the past five years. Further, the current multiple is significantly lower than the highs of 25.50. This suggests that it could be a solid entry point.



Further, the stock’s PE also compares favorably with the Zacks classified Consumer Discretionary sector’s trailing twelve months PE ratio, which stands at 23.30. At the very least, this indicates that the stock is relatively undervalued right now, compared to its peers.



We should point out that Sturm, Ruger & Company has a forward PE ratio (price relative to this year’s earnings) of just 12.76, so it is fair to expect some increase in the company’s share price in the near future.

P/S Ratio

Another key metric to note is the Price/Sales ratio. This approach compares a given stock’s price to its total sales, where a lower reading is generally considered better. Some people like this metric more than other value-focused ones because it looks at sales, something that is far harder to manipulate with accounting tricks than earnings.

Right now, Sturm, Ruger & Company has a P/S ratio of about 1.43. This is a bit lower than the S&P 500 average, which comes in at 3.09 right now. Also, as we can see in the chart below, this is well below the highs for this stock in particular over the past few years.



If anything, RGR is in the lower end of its range in the time period from a P/S metric, suggesting some level of undervalued trading—at least compared to historical norms.

Broad Value Outlook

In aggregate, Sturm, Ruger & Company currently has a Zacks Value Style Score of ‘A’, putting it into the top 20% of all stocks we cover from this look. This makes RGR a solid choice for value investors.

What About the Stock Overall?

While Sturm, Ruger & Company might be a good choice for value investors, there are plenty of other factors to consider before investing in this name. In particular, it is worth noting that the company has a Growth grade of ‘B’ and a Momentum score of ‘A’. This gives RGR a Zacks VGM score—or its overarching fundamental grade—of ‘A’. (You can read more about the Zacks Style Scores here >>)

Meanwhile, the company’s recent earnings estimates have been mixed at best. The current quarter has seen no upward revisions in the past sixty days compared to one downward revision, while the full year estimate has seen one upward and no downward revisions in the same time period.

This has had a mixed impact on the consensus estimate, as the current quarter consensus estimate has dropped by 9.7% in the past two months, while the full year estimate has inched higher by 1.1%. You can see the consensus estimate trend and recent price action for the stock in the chart below:

This trend indicates that thought the stock might face near-term hurdles, its longer-term prospects look favorable. Hence we have a Zacks Rank #2 (Buy) on the stock and are hopeful of outperformance from the company in future.

Bottom Line

Sturm, Ruger & Company is an inspired choice for value investors, as it is hard to beat its incredible lineup of statistics on this front. Boasting a Zacks Rank #2, the stock belongs to an industry which is ranked among the Top 25%, which indicates that broader factors are favorable for the company. Further, over the past six months, the Zacks classified Leisure & Recreation Products industry’s performance has almost been in line with the broader market, as you can see below:



So, it might pay for value investors to delve deeper into the company’s prospects, as fundamentals indicate that this stock could be a good pick.

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