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 rely on traditional forms of analysis on key valuation metrics to find stocks that they believe are undervalued, leaving room for profits.
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 company to watch right now is Pinnacle Financial Partners (PNFP). PNFP is currently sporting a Zacks Rank #2 (Buy), as well as an A grade for Value.
We should also highlight that PNFP has a P/B ratio of 1.16. The P/B ratio pits a stock's market value against 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 1.82. Over the past year, PNFP's P/B has been as high as 1.64 and as low as 1.04, with a median of 1.32.
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. PNFP has a P/S ratio of 1.36. This compares to its industry's average P/S of 2.38.
Finally, we should also recognize that PNFP has a P/CF ratio of 9.92. 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. PNFP's P/CF compares to its industry's average P/CF of 17.60. Over the past 52 weeks, PNFP's P/CF has been as high as 17.68 and as low as 8.90, with a median of 13.08.
Value investors will likely look at more than just these metrics, but the above data helps show that Pinnacle Financial Partners is likely undervalued currently. And when considering the strength of its earnings outlook, PNFP sticks out as one of the market's strongest value stocks.
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Pinnacle Financial Partners, Inc. (PNFP): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).