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 fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.
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 UMB Financial (UMBF). UMBF is currently sporting a Zacks Rank #2 (Buy), as well as an A grade for Value.
Another notable valuation metric for UMBF is its P/B ratio of 1.35. 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. Within the past 52 weeks, UMBF's P/B has been as high as 1.76 and as low as 0.99, with a median of 1.41.
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. UMBF has a P/S ratio of 2.24. This compares to its industry's average P/S of 2.26.
Finally, our model also underscores that UMBF has a P/CF ratio of 15.76. 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. UMBF's P/CF compares to its industry's average P/CF of 17.92. Within the past 12 months, UMBF's P/CF has been as high as 16.15 and as low as 8.94, with a median of 12.36.
These figures are just a handful of the metrics value investors tend to look at, but they help show that UMB Financial is likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, UMBF feels like a great value stock at the moment.
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UMB Financial Corporation (UMBF): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).