Value investing is easily one of the most popular ways to find great stocks in any market environment. After all, who wouldn’t want to find stocks that are either flying under the radar and are compelling buys, or offer up tantalizing discounts when compared to fair value?
One way to find these companies is by looking at several key metrics and financial ratios, many of which are crucial in the value stock selection process. Let’s put Deutsche Post AG (DE:DPWGn) (OTC:DPSGY) stock into this equation and find out if it is a good choice for value-oriented investors right now, or if investors subscribing to this methodology should look elsewhere for top picks:
PE Ratio
A key metric that value investors always look at is the Price to Earnings Ratio, or PE for short. This shows us how much investors are willing to pay for each dollar of earnings in a given stock, and is easily one of the most popular financial ratios in the world. The best use of the PE ratio is to compare the stock’s current PE ratio with: a) where this ratio has been in the past; b) how it compares to the average for the industry/sector; and c) how it compares to the market as a whole.
On this front, Deutsche Post has a trailing twelve months PE ratio of 17.67. This level compares pretty favorably with the market at large, as the PE ratio for the S&P 500 comes in at about 20.05.
If we focus on the long-term trend of the stock the current level puts Deutsche Post’s current PE among its highs over the observed period. This suggests that the stock is overvalued compared to its own historical levels.
Further, the stock’s PE compares favorably with its industry’s trailing twelve months PE ratio, which stands at 24.97. At the very least, this indicates that the stock is relatively undervalued right now, compared to its peers.
We should also point out that Deutsche Post has a forward PE ratio (price relative to this year’s earnings) of 16.10 – which is lower than the current level. So, it is fair to say that a slightly more value-oriented path may be ahead for Deutsche Post stock in the near term too.
PS Ratio
Another key metric to note is the Price/Sales ratio. This approach compares a given stock’s price to its total sales, where a lower reading is generally considered better. Some people like this metric more than other value-focused ones because it looks at sales, something that is far harder to manipulate with accounting tricks than earnings.
Right now, Deutsche Post has a P/S ratio of about 0.77. This compares somewhat similarly with the industry average, which comes in at 0.76x right now. Moreover, the stock has always traded cheaper than the industry in terms of P/S, over the observed period.
DPSGY is actually in the higher zone of its trading range in the time period per the P/S metric, which suggests that the company’s stock price has already appreciated to some degree, relative to its sales.
Broad Value Outlook
In aggregate, Deutsche Post currently has a Value Score of ‘A’, putting it into the top 20% of all stocks we cover from this look. This makes Deutsche Post a solid choice for value investors, and all of its above listed metrics make this pretty clear too.
What About the Stock Overall?
Though Deutsche Post might be a good choice for value investors, there are plenty of other factors to consider before investing in this name. In particular, it is worth noting that the company has a Growth grade of ‘C’ and a Momentum score of ‘B’. This gives DPSGY a Zacks VGM score—or its overarching fundamental grade—of ‘B’. (You can read more about the Zacks Style Scores here >>)
Meanwhile, the company’s earnings estimates have been trending upward lately. The current quarter has seen one estimate go higher in the past sixty days compared to two lower, while the full year estimate has seen two upward revisions and no downward revisions in the same time period.
This has had a meaningful impact on the consensus estimate as the current quarter consensus estimate has increased 3.9% over the past two months, while the full year estimate has moved up 6.7%.
This bullish trend is why the stock boasts a Zacks Rank #1 (Strong Buy) and why we are expecting outperformance from the company in the near term.
Bottom Line
Deutsche Post is an inspired choice for value investors, as it is hard to beat its incredible lineup of statistics on this front. Boasting a good industry rank (among the Top 43% out of more than 250 industries) and a top Zacks Rank, the company deserves attention right now. So, it might pay for value investors to delve deeper into the company’s prospects, as fundamentals indicate that this stock could be a compelling pick.
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Deutsche Post AG (DPSGY): Free Stock Analysis Report
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