Is Vipshop (VIPS) Stock Undervalued 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.

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 tried-and-true metrics and fundamental analysis to find companies that they believe are undervalued at their current share price levels.

On top of the Zacks Rank, investors can also look at our innovative Style Scores system to find stocks with specific traits. For example, value investors will want to focus on the "Value" category. Stocks with high Zacks Ranks and "A" grades for Value will be some of the highest-quality value stocks on the market today.

One company value investors might notice is Vipshop (VIPS). VIPS is currently sporting a Zacks Rank #2 (Buy) and an A for Value. The stock is trading with a P/E ratio of 6.96, which compares to its industry's average of 9.55. VIPS's Forward P/E has been as high as 7.28 and as low as 4.92, with a median of 5.91, all within the past year.

We should also highlight that VIPS has a P/B ratio of 1.64. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. This stock's P/B looks attractive against its industry's average P/B of 2.47. Over the past 12 months, VIPS's P/B has been as high as 1.69 and as low as 1.09, with a median of 1.33.

Value investors also love the P/S ratio, which is calculated by simply dividing a stock's price with the company's sales. Some people prefer this metric because sales are harder to manipulate on an income statement. This means it could be a truer performance indicator. VIPS has a P/S ratio of 0.56. This compares to its industry's average P/S of 0.63.

Finally, we should also recognize that VIPS has a P/CF ratio of 7.96. This data point considers a firm's operating cash flow and is frequently used to find companies that are undervalued when considering their solid cash outlook. VIPS's P/CF compares to its industry's average P/CF of 12.29. Over the past 52 weeks, VIPS's P/CF has been as high as 8.18 and as low as 5.08, with a median of 6.08.

These are only a few of the key metrics included in Vipshop'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, VIPS looks like an impressive value stock at the moment.

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This article originally published on Zacks Investment Research (zacks.com).

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