While the proven Zacks Rank places an emphasis on earnings estimates and estimate revisions to find strong stocks, we also know that investors tend to develop their own individual strategies. With this in mind, we are always looking at value, growth, and momentum trends to discover great companies.
Of these, value investing is easily one of the most popular ways to find great stocks in any market environment. Value investors rely on traditional forms of analysis on key valuation metrics to find stocks that they believe are undervalued, leaving room for profits.
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 stock to keep an eye on is Financial Institutions (FISI). FISI is currently sporting a Zacks Rank of #2 (Buy), as well as a Value grade of A. The stock holds a P/E ratio of 8.48, while its industry has an average P/E of 11.13. FISI's Forward P/E has been as high as 9.35 and as low as 5.47, with a median of 7.65, all within the past year.
We should also highlight that FISI has a P/B ratio of 0.91. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. FISI's current P/B looks attractive when compared to its industry's average P/B of 1.36. Over the past year, FISI's P/B has been as high as 0.95 and as low as 0.59, with a median of 0.79.
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. FISI has a P/S ratio of 1.22. This compares to its industry's average P/S of 1.93.
Investors could also keep in mind First Bank (FRBA), an Banks - Northeast stock with a Zacks Rank of # 1 (Strong Buy) and Value grade of A.
First Bank also has a P/B ratio of 0.74 compared to its industry's price-to-book ratio of 1.36. Over the past year, its P/B ratio has been as high as 0.79, as low as 0.60, with a median of 0.70.
These figures are just a handful of the metrics value investors tend to look at, but they help show that Financial Institutions and First Bank are likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, FISI and FRBA feels like a great value stock at the moment.
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Financial Institutions, Inc. (FISI) : Free Stock Analysis Report
First Bank (FRBA) : Free Stock Analysis Report
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
