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.
Considering these trends, value investing is clearly one of the most preferred ways to find strong stocks in any type of market. Value investors use a variety of methods, including tried-and-true valuation metrics, to find these stocks.
Zacks has developed the innovative Style Scores system to highlight stocks with specific traits. For example, value investors will be interested in stocks with great grades in the "Value" category. When paired with a high Zacks Rank, "A" grades in the Value category are among the strongest value stocks on the market today.
One company to watch right now is Midland States Bancorp (MSBI). MSBI is currently sporting a Zacks Rank #2 (Buy), as well as a Value grade of A. The stock has a Forward P/E ratio of 7.29. This compares to its industry's average Forward P/E of 10.63. Over the last 12 months, MSBI's Forward P/E has been as high as 11.26 and as low as 5.82, with a median of 7.31.
Another notable valuation metric for MSBI is its P/B ratio of 0.84. The P/B ratio is used to compare a stock's market value with its book value, which is defined as total assets minus total liabilities. This stock's P/B looks attractive against its industry's average P/B of 1.37. Within the past 52 weeks, MSBI's P/B has been as high as 0.89 and as low as 0.62, with a median of 0.79.
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 preferred metric because revenue can't really be manipulated, so sales are often a truer performance indicator. MSBI has a P/S ratio of 1.34. This compares to its industry's average P/S of 2.23.
These figures are just a handful of the metrics value investors tend to look at, but they help show that Midland States Bancorp is likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, MSBI feels like a great value stock at the moment.
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Midland States Bancorp, Inc. (MSBI): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).