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.
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 Hanmi Financial (HAFC). HAFC is currently sporting a Zacks Rank #2 (Buy) and an A for Value. The stock has a Forward P/E ratio of 9.54. This compares to its industry's average Forward P/E of 10.64. Over the last 12 months, HAFC's Forward P/E has been as high as 11.89 and as low as 7.95, with a median of 9.30.
Another notable valuation metric for HAFC is its 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 stock's P/B looks attractive against its industry's average P/B of 1.37. HAFC's P/B has been as high as 1.10 and as low as 0.74, with a median of 0.94, over the past year.
Value investors also love the P/S ratio, which is calculated by simply dividing a stock's price with the company's sales. Some people prefer this metric because sales are harder to manipulate on an income statement. This means it could be a truer performance indicator. HAFC has a P/S ratio of 1.96. This compares to its industry's average P/S of 2.39.
Finally, investors will want to recognize that HAFC has a P/CF ratio of 10.15. 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. This stock's P/CF looks attractive against its industry's average P/CF of 12.52. HAFC's P/CF has been as high as 11.16 and as low as 7.18, with a median of 9.60, all within the past year.
Value investors will likely look at more than just these metrics, but the above data helps show that Hanmi Financial is likely undervalued currently. And when considering the strength of its earnings outlook, HAFC sticks out as one of the market's strongest value stocks.
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Hanmi Financial Corporation (HAFC): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).