Many investors like to look for value in stocks, but this can be very tough to define. There is great debate regarding which metrics are the best to focus on in this regard, and which are not really quality indicators of future performance. Fortunately, with our new style score system we have identified the key statistics to pay close attention to and thus which stocks might be the best for value investors in the near term.
This method discovered several great candidates for value-oriented investors, but today let’s focus on SkyWest Inc. SKYW as this stock is looking especially impressive right now. And while there are numerous reasons why this is the case, we have highlighted three of the most vital reasons for SKYW’s status as a solid value stock below:
Price to Forward Sales for SkyWest
One of the most underrated ratios for value investors is the price/forward sales metric. This ratio shows investors how much they are paying for each dollar of revenues generated. In other words, a lower number is better here while a price to sales ratio of 1 means that you are paying one dollar for each dollar in sales.
With a P/S ratio of 0.42 SKYW investors are paying 42 cents in stock price for each dollar of revenue generated by the company. Compare this to the industry average of 1.11, and it is safe to say that SKYW is undervalued compared to many of its peers on this important metric.
Price/Cash Flow for SkyWest Stock
An often overlooked ratio that can still be a great indicator of value is the price/cash flow metric. This reading is preferred by some since it avoids amortization and depreciation concerns and can give a more accurate picture of the financial health in a business.
The P/CF ratio for SKYW comes in at 2.80, and since investors are generally looking for a reading under 20 here, this is pretty good news. Meanwhile, we should also point out that the industry average for this metric is 3.74, so SkyWest has its peers beat in this regard too.
SKYW Earnings Estimate Revisions Moving in the Right Direction
The solid value ratios outlined in the preceding paragraphs might be enough for some investors, but we should also note that the earnings estimate revisions have been trending in a positive direction as well. Analysts who follow SKYW stock have been raising their estimates for the company lately, meaning that the EPS picture is looking a bit more favorably for SkyWest now.
Over the past 60 days, 3 earnings estimates have gone higher compared to no downward revisions for the full year, while we are also seeing 2 upward revisions with no downward revisions for the next year time frame too. These revisions have helped to boost the consensus estimate as 60 days ago SKYW was expected to post earnings of $2.53 per share for the full year though today it looks to have EPS of $2.65 for the full year.
For the reasons detailed above, investors shouldn’t be surprised to read that we have SKYW as a stock with a Value Score of ‘A’ and a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
So if you are a value investor, definitely keep SKYW on your short list as this looks to be a stock that is very well-positioned for gains in the near term.
Confidential from Zacks
Beyond this Tale of the Tape, would you like to see Zacks' best recommendations that are not available to the public? Our Executive VP, Steve Reitmeister, knows when key trades are about to be triggered and which of our experts has the hottest hand. Click to see them now>>
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
To read this article on Zacks.com click here.