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Are These Consumer Discretionary Stocks Undervalued Right Now?

Zacks Equity Research
·2-min read

The proven Zacks Rank system focuses on earnings estimates and estimate revisions to find winning stocks. Nevertheless, we know that our readers all have their own perspectives, so we are always looking at the latest trends in value, growth, and momentum to find strong picks.

Of these, value investing is easily one of the most popular ways to find great stocks in any market environment. Value investors use tried-and-true metrics and fundamental analysis to find companies that they believe are undervalued at their current share price levels.

Zacks has developed the innovative Style Scores system to highlight stocks with specific traits. For example, value investors will be interested in stocks with great grades in the "Value" category. When paired with a high Zacks Rank, "A" grades in the Value category are among the strongest value stocks on the market today.

One stock to keep an eye on is Central Garden & Pet (CENT). CENT is currently sporting a Zacks Rank of #2 (Buy) and an A for Value. The stock is trading with a P/E ratio of 16.16, which compares to its industry's average of 17.97. CENT's Forward P/E has been as high as 24.80 and as low as 14.67, with a median of 18.40, all within the past year.

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Value investors also frequently use the P/S ratio. This metric is found by dividing a stock's price with the company's revenue. This is a popular metric because sales are harder to manipulate on an income statement, so they are often considered a better performance indicator. CENT has a P/S ratio of 0.86. This compares to its industry's average P/S of 1.1.

If you're looking for another solid Consumer Products - Discretionary value stock, take a look at The Container Store (TCS). TCS is a # 2 (Buy) stock with a Value score of A.

Additionally, The Container Store has a P/B ratio of 1.28 while its industry's price-to-book ratio sits at 8.04. For TCS, this valuation metric has been as high as 3, as low as 1.22, with a median of 1.75 over the past year.

These figures are just a handful of the metrics value investors tend to look at, but they help show that Central Garden & Pet and The Container Store are likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, CENT and TCS feels like a great value stock at the moment.


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Central Garden & Pet Company (CENT) : Free Stock Analysis Report
 
Container Store The (TCS) : Free Stock Analysis Report
 
To read this article on Zacks.com click here.
 
Zacks Investment Research