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Should Value Investors Pick Publicis Groupe (PUBGY) Stock Now?

By Zacks Investment ResearchStock MarketsJan 17, 2018 09:55PM ET
www.investing.com/analysis/should-value-investors-pick-publicis-groupe-pubgy-stock-now-200281478
Should Value Investors Pick Publicis Groupe (PUBGY) Stock Now?
By Zacks Investment Research   |  Jan 17, 2018 09:55PM ET
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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 Publicis Groupe S.A. (OTC:PUBGY) 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, Publicis Groupe has a trailing twelve months PE ratio of 14.2, 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 22.2. If we focus on the long-term PE trend, the current level stands below the highs for the stock, indicating that it could be a good entry point.



Further, the stock’s PE also compares favorably with its industry’s trailing twelve months PE ratio, which stands at 24.4. At the very least, this indicates that the stock is relatively undervalued right now, compared to its peers.




We should also point out that Publicis Groupe has forward PE of 12.4x, so it is fair to say that a slightly more value-oriented path may be ahead for the 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, Publicis Groupe has a P/S ratio of about 1.5. This is much lower than the S&P 500 average, which comes in at 3.5 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.




Broad Value Outlook

In aggregate, Publicis Groupe 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 Publicis Groupe a solid choice for value investors, and some of its other key metrics make this pretty clear too.

What About the Stock Overall?

While Publicis Groupe 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 A and a Momentum score of D. This gives PUBGY a Zacks VGM score—or its overarching fundamental grade—of A. (You can read more about the Zacks Style Scores here >>)

Meanwhile, the current year consensus estimate has decreased nearly 3.3% in the past two months. You can see the consensus estimate trend and recent price action for the stock in the chart below:

Publicis Groupe SA (PA:PUBP) Price and Consensus

This negative trend is why the stock has just a Zacks Rank #3 (Hold) despite strong value metrics and why we are looking for in-line performance from the company in the near term.

Bottom Line

Publicis Groupe is an inspired choice for value investors, as it is hard to beat its incredible lineup of statistics on this front. However, with a sluggish industry rank (bottom 18%) and a Zacks Rank #3, it is hard to get too excited about this company overall. Further, in the past year, its industry has underperformed the broader market, as you can see below:



So, value investors might want to wait for estimates, analyst sentiment and broader factors to turn around in this name first, but once that happens, this stock could be a compelling pick.


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Publicis Groupe SA (PUBGY): Free Stock Analysis Report

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Zacks Investment Research
Should Value Investors Pick Publicis Groupe (PUBGY) Stock Now?
 

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Should Value Investors Pick Publicis Groupe (PUBGY) Stock Now?

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