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Should Value Investors Buy China Distance (DL) Stock?

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.

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.

Luckily, Zacks has developed its own Style Scores system in an effort to find stocks with specific traits. Value investors will be interested in the system's "Value" category. Stocks with both "A" grades in the Value category and high Zacks Ranks are among the strongest value stocks on the market right now.

One company value investors might notice is China Distance (DL). DL is currently sporting a Zacks Rank of #1 (Strong Buy) and an A for Value.

Investors should also note that DL holds a PEG ratio of 0.53. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. DL's PEG compares to its industry's average PEG of 1.20. DL's PEG has been as high as 0.82 and as low as 0.43, with a median of 0.56, 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. This is a popular metric because sales are harder to manipulate on an income statement, so they are often considered a better performance indicator. DL has a P/S ratio of 1.09. This compares to its industry's average P/S of 1.26.

These are only a few of the key metrics included in China Distance's strong Value grade, but they help show that the stock is likely undervalued right now. When factoring in the strength of its earnings outlook, DL looks like an impressive value stock at the moment.


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