Value investing is easily one of the most popular ways to find great stocks in any market environment. After all, who wouldn’t want to find stocks that are either flying under the radar and are compelling buys, or offer up tantalizing discounts when compared to fair value?
One way to find these companies is by looking at several key metrics and financial ratios, many of which are crucial in the value stock selection process. Let’s put GAIN Capital Holdings, Inc. stock into this equation and find out if it is a good choice for value-oriented investors right now, or if investors subscribing to this methodology should look elsewhere for top picks:
PE Ratio
A key metric that value investors always look at is the Price to Earnings Ratio, or PE for short. This shows us how much investors are willing to pay for each dollar of earnings in a given stock, and is easily one of the most popular financial ratios in the world. The best use of the PE ratio is to compare the stock’s current PE ratio with: a) where this ratio has been in the past; b) how it compares to the average for the industry/sector; and c) how it compares to the market as a whole.
On this front, GAIN Capital has a trailing twelve months PE ratio of 7.25, as you can see in the chart below:
This level actually compares pretty favorably with the market at large, as the PE for the S&P 500 stands at about 19.88. If we focus on the long-term PE trend, GAIN Capital’s current PE level puts it below its midpoint over the past five years. Moreover, the current level is fairly below the highs for this stock, suggesting it might be a good entry point.
Further, the stock’s PE also compares favorably with the Zacks classified Financial – Investment Brokers industry’s trailing twelve months PE ratio, which stands at 18.73. At the very least, this indicates that the stock is largely undervalued right now, compared to its peers.
We should also point out that GAIN Capital has a forward PE ratio (price relative to this year’s earnings) of 11.52, so we might say that the forward earnings estimates indicate that the company’s share price will likely appreciate in the near future.
P/S Ratio
Another key metric to note is the Price/Sales ratio. This approach compares a given stock’s price to its total sales, where a lower reading is generally considered better. Some people like this metric more than other value-focused ones because it looks at sales, something that is far harder to manipulate with accounting tricks than earnings.
Right now, GAIN Capital has a P/S ratio of about 0.81. This is considerably lower than the S&P 500 average, which comes in at 2.84 right now. Also, as we can see in the chart below, this is well below the highs for this stock in particular over the past few years.
If anything, GAIN Capital is in the lower end of its range in the time period from a P/S metric, suggesting some level of undervalued trading—at least compared to historical norms.
Broad Value Outlook
In aggregate, GAIN Capital currently has a Zacks Value Style Score of ‘A’, putting it into the top 20% of all stocks we cover from this look. This makes GAIN Capital a solid choice for value investors, and some of its other key metrics make this pretty clear too.
The P/CF ratio (another great indicator of value) comes in at 2.04, which is far better than the industry average of 4.44. Clearly, GAIN Capital is a solid choice on the value front from multiple angles.
What About the Stock Overall?
Though GAIN Capital might be a good choice for value investors, there are plenty of other factors to consider before investing in this name. In particular, it is worth noting that the company has a Growth grade of ‘B’ and a Momentum score of ‘B’. This gives GAIN Capital a Zacks VGM score—or its overarching fundamental grade—of ‘A’. (You can read more about the Zacks Style Scores here >>)
Meanwhile, the company’s recent earnings estimates have been mixed at best. The current quarter has seen two estimates go lower in the past sixty days compared to no upward revision, while the full year estimate has seen three upward revisions and no downward revision in the same time period.
This has had a mixed impact on the consensus estimate as well, as the current quarter consensus estimate has tumbled nearly 31% in the past two months, while the full year estimate has gone up by 3.6%.
You can see the consensus estimate trend and recent price action for the stock in the chart below:
GAIN CAP HLDGS Price and Consensus
This mixed trend indicates that while the stock’s growth story is intact over the medium term, analysts have some apprehensions about the stock in the immediate future.
Bottom Line
GAIN Capital is an inspired choice for value investors, as it is hard to beat its incredible lineup of statistics on this front. . It has a fairly good industry rank(Top 13% out of more than 250 industries). However, with a Zacks Rank #3 (Hold), it is hard to get too excited about this company overall.
So, value investors might want to wait for estimates and analyst sentiment to turn around in this name first, but once that happens, this stock could be a compelling pick.
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How would you like to see our best recommendations to help you find today’s most promising long-term stocks? Starting now, you can look inside our portfolios featuring stocks under $10, income stocks, value investments and more. These picks, which have double and triple-digit profit potential, are rarely available to the public. But you can see them now. Click here >>
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Is GAIN Capital a Great Stock for Value Investors?
Value investing is easily one of the most popular ways to find great stocks in any market environment. After all, who wouldn’t want to find stocks that are either flying under the radar and are compelling buys, or offer up tantalizing discounts when compared to fair value?
One way to find these companies is by looking at several key metrics and financial ratios, many of which are crucial in the value stock selection process. Let’s put GAIN Capital Holdings, Inc. stock into this equation and find out if it is a good choice for value-oriented investors right now, or if investors subscribing to this methodology should look elsewhere for top picks:
PE Ratio
A key metric that value investors always look at is the Price to Earnings Ratio, or PE for short. This shows us how much investors are willing to pay for each dollar of earnings in a given stock, and is easily one of the most popular financial ratios in the world. The best use of the PE ratio is to compare the stock’s current PE ratio with: a) where this ratio has been in the past; b) how it compares to the average for the industry/sector; and c) how it compares to the market as a whole.
On this front, GAIN Capital has a trailing twelve months PE ratio of 7.25, as you can see in the chart below:
This level actually compares pretty favorably with the market at large, as the PE for the S&P 500 stands at about 19.88. If we focus on the long-term PE trend, GAIN Capital’s current PE level puts it below its midpoint over the past five years. Moreover, the current level is fairly below the highs for this stock, suggesting it might be a good entry point.
Further, the stock’s PE also compares favorably with the Zacks classified Financial – Investment Brokers industry’s trailing twelve months PE ratio, which stands at 18.73. At the very least, this indicates that the stock is largely undervalued right now, compared to its peers.
We should also point out that GAIN Capital has a forward PE ratio (price relative to this year’s earnings) of 11.52, so we might say that the forward earnings estimates indicate that the company’s share price will likely appreciate in the near future.
P/S Ratio
Another key metric to note is the Price/Sales ratio. This approach compares a given stock’s price to its total sales, where a lower reading is generally considered better. Some people like this metric more than other value-focused ones because it looks at sales, something that is far harder to manipulate with accounting tricks than earnings.
Right now, GAIN Capital has a P/S ratio of about 0.81. This is considerably lower than the S&P 500 average, which comes in at 2.84 right now. Also, as we can see in the chart below, this is well below the highs for this stock in particular over the past few years.
If anything, GAIN Capital is in the lower end of its range in the time period from a P/S metric, suggesting some level of undervalued trading—at least compared to historical norms.
Broad Value Outlook
In aggregate, GAIN Capital currently has a Zacks Value Style Score of ‘A’, putting it into the top 20% of all stocks we cover from this look. This makes GAIN Capital a solid choice for value investors, and some of its other key metrics make this pretty clear too.
The P/CF ratio (another great indicator of value) comes in at 2.04, which is far better than the industry average of 4.44. Clearly, GAIN Capital is a solid choice on the value front from multiple angles.
What About the Stock Overall?
Though GAIN Capital might be a good choice for value investors, there are plenty of other factors to consider before investing in this name. In particular, it is worth noting that the company has a Growth grade of ‘B’ and a Momentum score of ‘B’. This gives GAIN Capital a Zacks VGM score—or its overarching fundamental grade—of ‘A’. (You can read more about the Zacks Style Scores here >>)
Meanwhile, the company’s recent earnings estimates have been mixed at best. The current quarter has seen two estimates go lower in the past sixty days compared to no upward revision, while the full year estimate has seen three upward revisions and no downward revision in the same time period.
This has had a mixed impact on the consensus estimate as well, as the current quarter consensus estimate has tumbled nearly 31% in the past two months, while the full year estimate has gone up by 3.6%.
You can see the consensus estimate trend and recent price action for the stock in the chart below:
GAIN CAP HLDGS Price and Consensus
GAIN CAP HLDGS Price and Consensus | GAIN CAP HLDGS Quote
This mixed trend indicates that while the stock’s growth story is intact over the medium term, analysts have some apprehensions about the stock in the immediate future.
Bottom Line
GAIN Capital is an inspired choice for value investors, as it is hard to beat its incredible lineup of statistics on this front. . It has a fairly good industry rank(Top 13% out of more than 250 industries). However, with a Zacks Rank #3 (Hold), it is hard to get too excited about this company overall.
So, value investors might want to wait for estimates and analyst sentiment to turn around in this name first, but once that happens, this stock could be a compelling pick.
Zacks' Top Investment Ideas for Long-Term Profit
How would you like to see our best recommendations to help you find today’s most promising long-term stocks? Starting now, you can look inside our portfolios featuring stocks under $10, income stocks, value investments and more. These picks, which have double and triple-digit profit potential, are rarely available to the public. But you can see them now. Click here >>