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 Kohl's Corporation (KSS Quick QuoteKSS - 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, Kohl's has a trailing twelve months PE ratio of 16.7, 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 20.4. If we focus on the long-term PE trend, Kohl's current PE level puts it above its midpoint of over the past five years, with the number having risen rapidly over the past few months.

Further, the stock’s PE compares favorably with the industry’s trailing twelve months PE ratio, which stands at 31.6. At the very least, this indicates that the stock is relatively undervalued right now, compared to its peers.

We should also point out that Kohl's has a forward PE ratio (price relative to this year’s earnings) of just 14.3, so it is fair to say that a slightly more value-oriented path may be ahead for Kohl's stock in the near term too.

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, Kohl's has a P/S ratio of about 0.7. This is much lower than the S&P 500 average, which comes in at 3.4 right now. This makes the stock undervalued from the P/S aspect as well.

Broad Value Outlook

In aggregate, Kohl's currently has a Value Score of B, putting it into the top 40% of all stocks we cover from this look. This makes Kohl's a solid choice for value investors.

What About the Stock Overall?

Though Kohl's 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 Score of A and a Momentum Score of C. This gives KSS 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 quite encouraging. The current year has seen four estimates go higher in the past thirty days compared to none downward revision, while the next year estimate has seen three upward and none downward revisions in the same time period.

This has had a meaningful impact on the consensus estimate, as the current year consensus estimate has surged 1.1% in the past month, while the next year estimate has increased 2%. You can see the consensus estimate trend and recent price action for the stock in the chart below:

Kohl's Corporation Price and Consensus

Even though Kohl's has a better estimates trend, the stock has just a Zacks Rank #3 (Hold). That is why we are looking for in-line performance from the company in the near term.

Bottom Line

Kohl's is an inspired choice for value investors, as it is hard to beat its incredible lineup of statistics on this front. Moreover, the stock possesses a solid Zacks Industry Rank (among top 7% of more than 250 industries). In fact, over the past year, its industry has clearly outperformed 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 compelling pick.

Looking for Stocks with Skyrocketing Upside?

Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.      

Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look.   

See the pot trades we're targeting>>