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Are Investors Undervaluing Camping World (CWH) Right Now?

While the proven Zacks Rank places an emphasis on earnings estimates and estimate revisions to find strong stocks, we also know that investors tend to develop their own individual strategies. With this in mind, we are always looking at value, growth, and momentum trends to discover great companies.

Of these, perhaps no stock market trend is more popular than value investing, which is a strategy that has proven to be successful in all sorts of market environments. Value investors use fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.

Luckily, Zacks has developed its own Style Scores system in an effort to find stocks with specific traits. Value investors will be interested in the system's "Value" category. Stocks with both "A" grades in the Value category and high Zacks Ranks are among the strongest value stocks on the market right now.

One company to watch right now is Camping World (CWH). CWH is currently sporting a Zacks Rank of #2 (Buy), as well as a Value grade of A. The stock holds a P/E ratio of 15.76, while its industry has an average P/E of 17.45. CWH's Forward P/E has been as high as 38.23 and as low as 7.78, with a median of 14.27, all within the past year.


Value investors also use the P/S ratio. The P/S ratio is is calculated as price divided by sales. This is a prefered metric because revenue can't really be manipulated, so sales are often a truer performance indicator. CWH has a P/S ratio of 0.34. This compares to its industry's average P/S of 0.95.

If you're looking for another solid Leisure and Recreation Services value stock, take a look at Royal Caribbean Cruises (RCL). RCL is a # 1 (Strong Buy) stock with a Value score of A.

Royal Caribbean Cruises is currently trading with a Forward P/E ratio of 11.49 while its PEG ratio sits at 0.43. Both of the company's metrics compare favorably to its industry's average P/E of 17.45 and average PEG ratio of 0.90.

RCL's Forward P/E has been as high as 20.18 and as low as 10.16, with a median of 14.18. During the same time period, its PEG ratio has been as high as 0.45, as low as 0.43, with a median of 0.44.

Additionally, Royal Caribbean Cruises has a P/B ratio of 6.01 while its industry's price-to-book ratio sits at 3.17. For RCL, this valuation metric has been as high as 8.71, as low as 4.46, with a median of 6.52 over the past year.

Value investors will likely look at more than just these metrics, but the above data helps show that Camping World and Royal Caribbean Cruises are likely undervalued currently. And when considering the strength of its earnings outlook, CWH and RCL sticks out as one of the market's strongest value stocks.

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Zacks Investment Research