Are Investors Undervaluing Genesco (GCO) 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, value investing is easily one of the most popular ways to find great stocks in any market environment. Value investors use a variety of methods, including tried-and-true valuation metrics, to find these stocks.

In addition to the Zacks Rank, investors looking for stocks with specific traits can utilize our Style Scores system. Of course, value investors will be most interested in the system's "Value" category. Stocks with "A" grades for Value and high Zacks Ranks are among the best value stocks available at any given moment.

One stock to keep an eye on is Genesco (GCO). GCO is currently sporting a Zacks Rank of #2 (Buy) and an A for Value. The stock holds a P/E ratio of 6.60, while its industry has an average P/E of 10.78. Over the past year, GCO's Forward P/E has been as high as 12.31 and as low as 5.49, with a median of 8.41.

We should also highlight that GCO has a P/B ratio of 1.12. The P/B is a method of comparing a stock's market value to 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 2.61. Over the past year, GCO's P/B has been as high as 1.81 and as low as 0.92, with a median of 1.49.

Value investors also love the P/S ratio, which is calculated by simply dividing a stock's price with the company's sales. This is a popular metric because sales are harder to manipulate on an income statement, so they are often considered a better performance indicator. GCO has a P/S ratio of 0.26. This compares to its industry's average P/S of 0.41.

Finally, we should also recognize that GCO has a P/CF ratio of 4.14. 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. This company's current P/CF looks solid when compared to its industry's average P/CF of 6.02. GCO's P/CF has been as high as 6.36 and as low as 3.41, with a median of 5.08, all within the past year.

If you're looking for another solid Retail - Apparel and Shoes value stock, take a look at Tapestry (TPR). TPR is a # 1 (Strong Buy) stock with a Value score of A.

Tapestry is currently trading with a Forward P/E ratio of 7.97 while its PEG ratio sits at 0.64. Both of the company's metrics compare favorably to its industry's average P/E of 10.78 and average PEG ratio of 0.70.

TPR's Forward P/E has been as high as 13.39 and as low as 6.70, with a median of 8.86. During the same time period, its PEG ratio has been as high as 1.09, as low as 0.57, with a median of 0.77.

Furthermore, Tapestry holds a P/B ratio of 3.37 and its industry's price-to-book ratio is 2.61. TPR's P/B has been as high as 4.14, as low as 2.63, with a median of 3.46 over the past 12 months.

Value investors will likely look at more than just these metrics, but the above data helps show that Genesco and Tapestry are likely undervalued currently. And when considering the strength of its earnings outlook, GCO and TPR sticks out as one of the market's strongest value stocks.

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