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 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 stock to keep an eye on is First Business Financial Services (FBIZ). FBIZ is currently sporting a Zacks Rank of #2 (Buy) and an A for Value. The stock holds a P/E ratio of 9.25, while its industry has an average P/E of 10.92. Over the past year, FBIZ’s Forward P/E has been as high as 9.25 and as low as 5.93, with a median of 7.24.
We should also highlight that FBIZ has a P/B ratio of 1.24. 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. This stock’s P/B looks solid versus its industry’s average P/B of 1.93. Within the past 52 weeks, FBIZ’s P/B has been as high as 1.28 and as low as 0.82, with a median of 1.02.
Value investors also frequently use the P/S ratio. This metric is found by dividing a stock’s price with the company’s revenue. This is a popular metric because sales are harder to manipulate on an income statement, so they are often considered a better performance indicator. FBIZ has a P/S ratio of 1.6. This compares to its industry’s average P/S of 1.95.
Finally, investors will want to recognize that FBIZ has a P/CF ratio of 7.29. This metric focuses on a firm’s operating cash flow and is often used to find stocks that are undervalued based on the strength of their cash outlook. FBIZ’s current P/CF looks attractive when compared to its industry’s average P/CF of 10.64. Within the past 12 months, FBIZ’s P/CF has been as high as 7.46 and as low as 4.42, with a median of 5.68.
Investors could also keep in mind Heartland Financial USA (HTLF), an Banks – Midwest stock with a Zacks Rank of # 1 (Strong Buy) and Value grade of A.
Additionally, Heartland Financial USA has a P/B ratio of 0.94 while its industry’s price-to-book ratio sits at 1.93. For HTLF, this valuation metric has been as high as 1.33, as low as 0.66, with a median of 0.78 over the past year.
These are just a handful of the figures considered in First Business Financial Services and Heartland Financial USA’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 FBIZ and HTLF is an impressive value stock right now.
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