Many investors like to look for value in stocks, but this can be very tough to define. There is great debate regarding which metrics are the best to focus on in this regard, and which are not really quality indicators of future performance. Fortunately, with our new style score system we have identified the key statistics to pay close attention to and thus which stocks might be the best for value investors in the near term.
This method discovered several great candidates for value-oriented investors, but today let’s focus on The Container Store Group, Inc. (NYSE:TCS) as this stock is looking especially impressive right now. And while there are numerous reasons why this is the case, we have highlighted three of the most vital reasons for TCS’ status as a solid value stock below:
PEG Ratio for TCS
While earnings are definitely important, it is vital to know how much you are paying for the growth of earnings as well. One can easily do that with the PEG ratio as this metric looks to show investors how much they are paying for each unit of earnings growth.
TCS manages to impress on this front as well, as the company’s PEG is just 0.43, suggesting that Container Store Groupis trading as a relative bargain right now. This is particularly the case when you compare this PEG to the industry, as the broader segment has an average PEG of 1.39 in comparison.
Price to Forward Sales for Container Store Group
One of the most underrated ratios for value investors is the price/forward sales metric. This ratio shows investors how much they are paying for each dollar of revenues generated. In other words, a lower number is better here while a price to sales ratio of 1 means that you are paying one dollar for each dollar in sales.
With a P/S ratio of 0.33, TCS investors are paying $33 cents in stock price for each dollar of revenue generated by the company. Compare this to the industry average of 0.68, and it is safe to say that TCS is undervalued compared to many of its peers on this important metric.
TCS Earnings Estimate Revisions Moving in the Right Direction
The solid value ratios outlined in the preceding paragraphs might be enough for some investors, but we should also note that the earnings estimate revisions have been trending in a positive direction as well. Analysts who follow TCS stock have been raising their estimates for the company lately, meaning that the EPS picture is looking a bit more favorably for Container Store Groupnow.
Over the past 30 days, 2 earnings estimates have gone higher compared to none lower for the full year, while we are also seeing that 2 estimates have moved upwards with no downward revision for the next year time frame too. These revisions have helped to boost the consensus estimate as 30 days ago TCS was expected to post earnings of 23 cents per share for the full year though today it looks to have EPS of 27 cents for the full year.
Bottom Line
For the reasons detailed above, investors shouldn’t be surprised to read that we have TCS as a stock with a Value Score of ‘A’ and a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
So if you are a value investor, definitely keep TCS on your short list as this looks to be a stock that is very well-positioned for gains in the near term.
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CONTAINER STORE (TCS): Free Stock Analysis Report
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