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Is GMS Inc. (GMS) Stock Undervalued Right Now?

Zacks

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.

Looking at the history of these trends, perhaps none is more beloved than value investing. This strategy simply looks to identify companies that are being undervalued by the broader market. Value investors use a variety of methods, including tried-and-true valuation metrics, to find these stocks.

On top of the Zacks Rank, investors can also look at our innovative Style Scores system to find stocks with specific traits. For example, value investors will want to focus on the “Value” category. Stocks with high Zacks Ranks and “A” grades for Value will be some of the highest-quality value stocks on the market today.

One company value investors might notice is GMS Inc. (GMS). GMS is currently holding a Zacks Rank of #2 (Buy) and a Value grade of A. The stock holds a P/E ratio of 10.01, while its industry has an average P/E of 20.64. GMS’s Forward P/E has been as high as 11.12 and as low as 3.22, with a median of 8.30, all within the past year.


GMS is also sporting a PEG ratio of 0.63. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company’s expected EPS growth rate. GMS’s industry currently sports an average PEG of 1.60. GMS’s PEG has been as high as 1.39 and as low as 0.46, with a median of 1.19, all within the past year.

Value investors also love the P/S ratio, which is calculated by simply dividing a stock’s price with the company’s 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. GMS has a P/S ratio of 0.31. This compares to its industry’s average P/S of 0.41.

Finally, our model also underscores that GMS has a P/CF ratio of 6.84. This metric takes into account a company’s operating cash flow and can be used to find stocks that are undervalued based on their solid cash outlook. GMS’s current P/CF looks attractive when compared to its industry’s average P/CF of 14.42. GMS’s P/CF has been as high as 7.20 and as low as 2.27, with a median of 5.86, all within the past year.

These are just a handful of the figures considered in GMS Inc.’s great Value grade. Still, they help show that the stock is likely being undervalued at the moment. Add this to the strength of its earnings outlook, and we can clearly see that GMS is an impressive value stock right now.


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