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, perhaps no stock market trend is more popular than value investing, which is a strategy that has proven to be successful in all sorts of market environments. 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 stock to keep an eye on is Hanmi Financial (HAFC). HAFC is currently sporting a Zacks Rank #2 (Buy), as well as an A grade for Value. The stock is trading with P/E ratio of 9.54 right now. For comparison, its industry sports an average P/E of 10.30. Over the past 52 weeks, HAFC's Forward P/E has been as high as 11.89 and as low as 7.95, with a median of 9.30.
We should also highlight that HAFC has a P/B ratio of 0.99. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. This company's current P/B looks solid when compared to its industry's average P/B of 1.38. Over the past 12 months, HAFC's P/B has been as high as 1.10 and as low as 0.74, with a median of 0.94.
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. HAFC has a P/S ratio of 2.01. This compares to its industry's average P/S of 2.45.
Finally, we should also recognize that HAFC has a P/CF ratio of 10.15. This figure highlights a company's operating cash flow and can be used to find firms that are undervalued when considering their impressive cash outlook. This company's current P/CF looks solid when compared to its industry's average P/CF of 11.61. Over the past 52 weeks, HAFC's P/CF has been as high as 11.16 and as low as 7.18, with a median of 9.60.
These figures are just a handful of the metrics value investors tend to look at, but they help show that Hanmi Financial is likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, HAFC feels like a great value stock at the moment.
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Hanmi Financial Corporation (HAFC): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).