Based on key financial metrics such as the price-to-sales ratio, shareholder yield and the price-earnings ratio, the following 3 stocks made the list for top value stocks in the Retailers - Miscellaneous Specialty industry. Those looking for value stocks to add to their portfolio may want to use this list as a starting point for further investment research.

Why Focus on Undervalued Retailers - Miscellaneous Specialty Stocks?

Value investors seek to buy stocks at a discount to their intrinsic value. Long-term returns show that such strategies are advantageous. Value stocks, as a group, tend to outperform growth stocks over extended periods of time. Typically, value investors perform financial analysis of numerous metrics, don’t follow the herd and are long-term investors.

AAII’s A+ Investor Value Grade is derived from a stock’s Value Score. The Value Score is the percentile rank of the average of the percentile ranks of the price-to-sales ratio, price-earnings ratio, enterprise-value-to-EBITDA (EV/EBITDA) ratio, shareholder yield, price-to-book-value ratio and price-to-free-cash-flow ratio. The score is variable, meaning it can consider all six ratios or, should any of the six ratios not be valid, the remaining ratios that are valid. To be assigned a Value Score, stocks must have a valid (non-null) ratio and corresponding ranking for at least two of the six valuation ratios.

What Goes Into AAII’s Value Grade?

Stock evaluation requires access to huge amounts of data as well as the knowledge and time to sift through it all, make sense of financial ratios, read income statements and analyze recent stock movement. AAII created A+ Investor, a robust data suite that condenses data research in an actionable and customizable way suitable for investors of all knowledge levels, to help investors with that task.

AAII’s proprietary stock grades come with A+ Investor. These offer intuitive A–F grades for more than just value. It is possible for a stock to appear cheap based on one valuation metric but appear expensive on another. It is also possible for one valuation ratio to be associated with outperforming stocks during certain periods of time but not others. Some stocks may even have null values for certain metrics like the price-earnings ratio or the price-to-book ratio but not others. An example of this would be a company with losses instead of profits or a negative book value because of heavy borrowing. Negative earnings or book value result in non-meaningful ratios that are left blank or null.

Click the button below to learn more about A+ Investor and subscribe today.

3 Undervalued Retailers - Miscellaneous Specialty Stocks

Of course, there are countless value stocks that are worth mentioning, but this is a concise list of the top 3 undervalued stocks in the Retailers - Miscellaneous Specialty industry for Friday, September 27, 2024. Let’s take a closer look at their individual scores to see how they measure up against each other and the Retailers - Miscellaneous Specialty industry median.

The Value Grade is assigned based on how each stock’s composite valuation compares to all other stocks.

The process for assigning grades starts with each variable for a given stock. The percentile rankings for all valid ratios that a stock has are calculated. So, for instance, a stock could have a price-to-book ranking in the 43rd percentile, a price-earnings ranking in the 67th percentile, a price-to-sales ranking in the 23rd percentile, etc. Then, those rankings are averaged for each stock. (A minimum of two valid variables are required, though all six will be used if available.)

Once the average of the individual variables is calculated, that average is ranked against all stocks. Put another way, each stock’s composite valuation is compared to all other stocks. These ranks are then sorted into quintiles from the cheapest 20% (a grade of A) to the most expensive 20% (a grade of F).

As always, we recommend that you conduct proper due diligence and research before investing in any security. We also suggest that investors utilize numerous grades, not just value, when it comes to deciding whether a company is a good fit for their allocation needs.

Bath & Body Works Inc’s Value Grade

Value Grade:

Bath & Body Works, Inc. is an omnichannel retailer focused on personal care and home fragrance. The Company sells merchandise through its retail stores in the United States (U.S.) and Canada, and through its websites and other channels, under the Bath & Body Works, White Barn and other brand names. Its international business is conducted through franchise, license and wholesale partners. It offers a range of care and home fragrance, including collections of fine fragrance mist, body lotion and body cream, 3-wick candles, home fragrance diffusers and liquid hand soap. Its products are differentiated through a combination of fragrance, packaging and quality at accessible prices. It also sells products under its sub brands, including White Barn. Its merchandise is sold through about 1,850 Company-operated stores and e-commerce sites in U.S. and Canada, and in 485 stores and 28 e-commerce sites in more than 40 other countries operating under franchise, license and wholesale arrangements.

Stocks with a Value Score from 81 to 100 are considered deep value, those with a score between 61 and 80 are value and so on.

Bath & Body Works Inc has a Value Score of 91, which is considered to be undervalued.

When you look at Bath & Body Works Inc’s price-to-sales ratio at 0.95 compared to the industry median at 0.88, this company has a higher price relative to revenue compared to its peers. This could make Bath & Body Works Inc’s stock less attractive for value investors.

Bath & Body Works Inc’s price-earnings ratio is 7.71 compared to the industry median at 19.29. This means it has a lower share price relative to earnings compared to its peers. This could make Bath & Body Works Inc more attractive for value investors.

Now, let’s assess Bath & Body Works Inc’s EV/EBITDA ratio, also known as enterprise multiple. At 6.7, when compared to the industry median of 10.0, the company may be considered undervalued in relation to its peers. Value investors could use the enterprise multiple to identify stocks that are considered overvalued or undervalued relative to their industry.

Shareholder yield is the sum of a stock’s dividend yield (paid over previous 12 months minus special dividends) and the percentage of net share buybacks over the previous 12 months. Bath & Body Works Inc’s shareholder yield is higher than its industry median ratio of (0.13%). Value investors may look for an attractive shareholder yield because it can be a powerful tool for identifying if the company has a good management team.

Lastly, let’s take a look at Bath & Body Works Inc’s price-to-free-cash-flow ratio (P/FCF), which can indicate a company’s market value relative to its operating cash flow. Bath & Body Works Inc’s price-to-free-cash-flow ratio is lower than its industry median ratio of 19.95. This could make Bath & Body Works Inc more attractive because the lower P/FCF ratio indicates that Bath & Body Works Inc is undervalued. The P/FCF ratio metric can also be viewed over a long-term time frame to see if the company's cash flow to share price value is generally improving or worsening.

Barnes & Noble Education Inc’s Value Grade

Value Grade:

Barnes & Noble Education, Inc. is a contract operator of physical and virtual bookstores for college and university campuses and K-12 institutions across the United States. The Company also textbook wholesalers and inventory management hardware and software providers. The Company operates through two segments: Retail, and Wholesale. The Retail Segment operates 1,245 college, university, and K-12 school bookstores, comprised of 707 physical bookstores and 538 virtual bookstores. The Wholesale Segment provided a comprehensive selection of new and used textbooks to approximately 2,750 physical bookstores, including its Retail segment's 707 physical bookstores and sources, and distributes new and used textbooks to its 538 virtual bookstores. Additionally, the Wholesale Segment sells hardware and a software suite of applications that provides inventory management and point-of-sale solutions to approximately 325 college bookstores.

Stocks with a Value Score from 81 to 100 are considered deep value, those with a score between 61 and 80 are value and so on.

Barnes & Noble Education Inc has a Value Score of 97, which is considered to be undervalued.

Barnes & Noble Education Inc’s price-to-book ratio is higher than its peers. This could make Barnes & Noble Education Inc less attractive for value investors when compared to the industry median at 2.38.

You can read more about Barnes & Noble Education Inc’s key financial metrics like shareholder yield, price-to-free-cash-flow and EV/EBITDA ratio, or learn more about its Momentum and Growth Grades, by subscribing to A+ Investor.

Sally Beauty Holdings Inc’s Value Grade

Value Grade:

Sally Beauty Holdings, Inc. is an international specialty retailer and distributor of professional beauty supplies with operations primarily in North America, South America, and Europe. The Company operates through two business segments: Sally Beauty Supply (SBS) and Beauty Systems Group (BSG). The SBS segment is a domestic and international chain of cash and carry retail stores, which offers professional beauty supplies to both salon professionals and retail customers, primarily in North America, Puerto Rico, and parts of Europe and South America. The BSG segment includes its franchise-based business Armstrong McCall, a service distributor of beauty products and supplies that offers professional beauty products directly to salons and salon professionals through its professional-only stores, e-commerce platforms and its own sales force in partially geographical territories in the United States and Canada. The Company operates approximately 4,486 company-operated stores.

Stocks with a Value Score from 81 to 100 are considered deep value, those with a score between 61 and 80 are value and so on.

Sally Beauty Holdings Inc has a Value Score of 90, which is considered to be undervalued.

Sally Beauty Holdings Inc’s price-earnings ratio is 9.7 compared to the industry median at 19.3. This means that it has a lower price relative to its earnings compared to its peers. This makes Sally Beauty Holdings Inc more attractive for value investors.

Sally Beauty Holdings Inc’s price-to-book ratio is lower than its peers. This could make Sally Beauty Holdings Inc fairly attractive for value investors when compared to the industry median at 2.38.

You can read more about Sally Beauty Holdings Inc’s key financial metrics like shareholder yield, price-to-free-cash-flow and EV/EBITDA ratio, or learn more about its Momentum and Growth Grades, by subscribing to A+ Investor.

Other Retailers - Miscellaneous Specialty Stock Grades

Value is just one of the five Stock Grades included in our A+ Investor service. AAII members can see the top-graded stocks—those with grades of A or B for value, growth, momentum, earnings estimate revisions and quality—on the A+ Stock Grades Screener.

Also, if you want full access to all of AAII’s premium services, you can subscribe to one convenient bundled plan called AAII Platinum where you can try out A+ Investor, AAII Dividend Investing, the Stock Superstars Report, Growth Investing and VMQ Stocks. With the other premium services, you can dive deep into additional metrics, portfolios, commentary and information about Retailers - Miscellaneous Specialty stocks as well as other industrys.

Choosing Which of the 3 Best Retailers - Miscellaneous Specialty Stocks Is Right for You

Choosing which value stocks to invest in will ultimately depend on your individual goals and allocation; however, comparing similar value stocks in the same industry can help you analyze which might be better investments for you in the long run. So, let’s take a look at the Value Grade for all of our stocks.

• Bath & Body Works Inc stock has a Value Grade of A.
• Barnes & Noble Education Inc stock has a Value Grade of A.
• Sally Beauty Holdings Inc stock has a Value Grade of A.

Now that you have a bit more background about each of the 3 undervalued stocks in the Retailers - Miscellaneous Specialty industry as well as their overall grades, it’s time for you to conduct additional research to see if these could fit your portfolio needs based on your goals and risk tolerance. AAII can help you figure out both and identify which investments align with what works best for you.

We do so through a program of education that teaches you to invest for yourself and become an effective manager of your own wealth—no more relying on others for your financial independence. You can rely on AAII for timeless articles on financial planning and stock-picking, unbiased research and actionable analysis that makes you a better investor.

A+ Investor adds to that qualitative teaching by giving you a powerful data suite that helps you whittle down investment decisions to find stocks, exchange-traded funds (ETFs) or mutual funds that meet your needs.

Additional Resources About Retailers - Miscellaneous Specialty Stocks

Want to learn more about Retailers - Miscellaneous Specialty stocks to see if they could be the right investment for you? Check out some additional resources and articles to help you on your financial journey.

• 3 Undervalued Retailers - Miscellaneous Specialty Stocks for Friday, September 27
• 3 Undervalued Retailers - Miscellaneous Specialty Stocks for Thursday, September 26
• Why Amer Sports Inc’s (AS) Stock Is Up 5.17%
• 3 Undervalued Retailers - Miscellaneous Specialty Stocks for Wednesday, September 25

AAII Disclaimer

We make no representations or warranties that any investor will, or is likely to, achieve profits similar to those shown, because past, hypothetical or simulated performance is not necessarily indicative of future results. Before making an investment decision, you should consider your circumstances and whether the information on our content is applicable to your situation. This information was prepared in good faith and we accept no liability for any errors or omissions. The full disclaimer can be read here.