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.
OFG Bancorp (OFG) is a stock many investors are watching right now. OFG is currently holding a Zacks Rank #2 (Buy) and a Value grade of A.
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 preferred metric because revenue can't really be manipulated, so sales are often a truer performance indicator. OFG has a P/S ratio of 2.04. This compares to its industry's average P/S of 2.06.
Finally, we should also recognize that OFG has a P/CF ratio of 9.01. This metric takes into account a company's operating cash flow and can be used to find stocks that are undervalued based on their solid cash outlook. OFG's current P/CF looks attractive when compared to its industry's average P/CF of 13.11. Within the past 12 months, OFG's P/CF has been as high as 10.12 and as low as 7.20, with a median of 8.82.
These figures are just a handful of the metrics value investors tend to look at, but they help show that OFG Bancorp is likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, OFG feels like a great value stock at the moment.
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OFG Bancorp (OFG): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).