The proven Zacks Rank system focuses on earnings estimates and estimate revisions to find winning stocks. Nevertheless, we know that our readers all have their own perspectives, so we are always looking at the latest trends in value, growth, and momentum to find strong picks.
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.
In addition to the Zacks Rank, investors looking for stocks with specific traits can utilize our Style Scores system. Of course, value investors will be most interested in the system's "Value" category. Stocks with "A" grades for Value and high Zacks Ranks are among the best value stocks available at any given moment.
One stock to keep an eye on is Eagle Bancorp Montana (EBMT). EBMT is currently holding a Zacks Rank #2 (Buy) and a Value grade of A.
Value investors also use the P/S ratio. The P/S ratio is calculated as price divided by 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. EBMT has a P/S ratio of 1.34. This compares to its industry's average P/S of 2.24.
Finally, investors should note that EBMT has a P/CF ratio of 6.16. This data point considers a firm's operating cash flow and is frequently used to find companies that are undervalued when considering their solid cash outlook. EBMT's current P/CF looks attractive when compared to its industry's average P/CF of 17.88. EBMT's P/CF has been as high as 7.56 and as low as 5.51, with a median of 6.35, all within the past year.
If you're looking for another solid Banks - Midwest value stock, take a look at First Financial Ban (FFBC). FFBC is a Zacks Rank of #2 (Buy) stock with a Value score of A.
Furthermore, First Financial Ban holds a P/B ratio of 0.99 and its industry's price-to-book ratio is 2.53. FFBC's P/B has been as high as 1.18, as low as 0.84, with a median of 0.98 over the past 12 months.
These figures are just a handful of the metrics value investors tend to look at, but they help show that Eagle Bancorp Montana and First Financial Ban are likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, EBMT and FFBC feels like a great value stock at the moment.
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Eagle Bancorp Montana, Inc. (EBMT): Free Stock Analysis Report
First Financial Bancorp. (FFBC): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).