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Is Designer Brands (DBI) a Great Value Stock Right Now?

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Here at Zacks, we focus on our proven ranking system, which places an emphasis on earnings estimates and estimate revisions, to find winning stocks. But we also understand that investors develop their own strategies, so we are constantly looking at the latest trends in value, growth, and momentum to find strong companies for our readers.

Of these, value investing is easily one of the most popular ways to find great stocks in any market environment. Value investors use fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.

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 company value investors might notice is Designer Brands (DBI). DBI is currently sporting a Zacks Rank of #2 (Buy), as well as an A grade for Value. The stock is trading with P/E ratio of 7.92 right now. For comparison, its industry sports an average P/E of 9.99. Over the past year, DBI's Forward P/E has been as high as 19.47 and as low as 6.64, with a median of 9.54.

Value investors also use the P/S ratio. The P/S ratio is is calculated as price divided by sales. Some people prefer this metric because sales are harder to manipulate on an income statement. This means it could be a truer performance indicator. DBI has a P/S ratio of 0.33. This compares to its industry's average P/S of 0.37.

Finally, our model also underscores that DBI has a P/CF ratio of 4.98. 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 5.90. Over the past 52 weeks, DBI's P/CF has been as high as 15.35 and as low as -41.18, with a median of 4.37.

J.Jill (JILL) may be another strong Retail - Apparel and Shoes stock to add to your shortlist. JILL is a # 1 (Strong Buy) stock with a Value grade of A.

Additionally, J.Jill has a P/B ratio of -4.27 while its industry's price-to-book ratio sits at 2.76. For JILL, this valuation metric has been as high as -1.61, as low as -4.34, with a median of -3.36 over the past year.

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


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