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 Medley Capital Corporation 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, Medley Capital has a trailing twelve months PE ratio of 8.72, 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 20.35. If we focus on the long-term PE trend, Medley Capital’s current PE level puts it slightly above its midpoint over the past five years.
Further, the stock’s PE also compares favorably with the Zacks classified Finance- Investment Management industry’s trailing twelve months PE ratio, which stands at 14.48. At the very least, this indicates that the stock is relatively undervalued right now, compared to its peers.
We should also point out that Medley Capital has a forward PE ratio (price relative to this year’s earnings) of 9.65, 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, Medley Capital has a P/S ratio of about 3.72. This is a bit higher than the S&P 500 average, which comes in at 3.14 right now. This suggests that the stock is slightly overvalued right now compared to the market from a P/S metric. Nevertheless, 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, MCC is slightly towards 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, Medley Capital currently has a Zacks Value Style Score of ‘B’, putting it into the top 40% of all stocks we cover from this look. This makes Medley Capital a solid choice for value investors, and some of its other key metrics make this pretty clear too.
For example, its P/CF ratio (another great indicator of value) comes in at 2.06, which is far better than the industry average of 5.47.
What About the Stock Overall?
Though Medley 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 ‘D’. This gives MCC a Zacks VGM score—or its overarching fundamental grade—of ‘B’. (You can read more about the Zacks Style Scores here >>)
Meanwhile, the company’s recent earnings estimates have been mixed at best. The current fiscal quarter has seen one estimate go higher in the past sixty days compared to two lower. Also, the fiscal full year estimate has seen one upward and two downward revisions in the same time period.
This has had just a small impact on the consensus estimate though as the current quarter consensus estimate has remained stable in the past two months, while the full year estimate has decreased by 2.4%. You can see the consensus estimate trend and recent price action for the stock in the chart below:
This somewhat mixed trend is why the stock has just a Zacks Rank #3 (Hold) and why we are looking for in-line performance from the company in the near term.
Bottom Line
Medley Capital is an inspired choice for value investors, as it is hard to beat its incredible lineup of statistics on this front. However, with a sluggish industry rank (among the bottom 42%) and a Zacks Rank #3, it is hard to get too excited about this company overall. In fact, over the past two years, the Zacks Finance- Investment Management industry has clearly underperformed the broader market, as you can see below:
So, value investors might want to wait for estimates, analyst sentiment and broader factors to turn around in this name first, but once that happens, this stock could be a compelling pick.
A Full-Blown Technological Breakthrough in the Making
Zacks’ Aggressive Growth Strategist Brian Bolan explores autonomous cars in our latest Special Report, Driverless Cars: Your Roadmap to Mega-Profits Today. In addition to who will be selling them and how the auto industry will be impacted, Brian reveals 8 stocks with tremendous gain potential to feed off this phenomenon. Click to see the stocks right now >>
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Is Medley Capital a Good 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 Medley Capital Corporation 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, Medley Capital has a trailing twelve months PE ratio of 8.72, 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 20.35. If we focus on the long-term PE trend, Medley Capital’s current PE level puts it slightly above its midpoint over the past five years.
Further, the stock’s PE also compares favorably with the Zacks classified Finance- Investment Management industry’s trailing twelve months PE ratio, which stands at 14.48. At the very least, this indicates that the stock is relatively undervalued right now, compared to its peers.
We should also point out that Medley Capital has a forward PE ratio (price relative to this year’s earnings) of 9.65, 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, Medley Capital has a P/S ratio of about 3.72. This is a bit higher than the S&P 500 average, which comes in at 3.14 right now. This suggests that the stock is slightly overvalued right now compared to the market from a P/S metric. Nevertheless, 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, MCC is slightly towards 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, Medley Capital currently has a Zacks Value Style Score of ‘B’, putting it into the top 40% of all stocks we cover from this look. This makes Medley Capital a solid choice for value investors, and some of its other key metrics make this pretty clear too.
For example, its P/CF ratio (another great indicator of value) comes in at 2.06, which is far better than the industry average of 5.47.
What About the Stock Overall?
Though Medley 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 ‘D’. This gives MCC a Zacks VGM score—or its overarching fundamental grade—of ‘B’. (You can read more about the Zacks Style Scores here >>)
Meanwhile, the company’s recent earnings estimates have been mixed at best. The current fiscal quarter has seen one estimate go higher in the past sixty days compared to two lower. Also, the fiscal full year estimate has seen one upward and two downward revisions in the same time period.
This has had just a small impact on the consensus estimate though as the current quarter consensus estimate has remained stable in the past two months, while the full year estimate has decreased by 2.4%. You can see the consensus estimate trend and recent price action for the stock in the chart below:
Medley Capital Corporation Price and Consensus
Medley Capital Corporation Price and Consensus | Medley Capital Corporation Quote
This somewhat mixed trend is why the stock has just a Zacks Rank #3 (Hold) and why we are looking for in-line performance from the company in the near term.
Bottom Line
Medley Capital is an inspired choice for value investors, as it is hard to beat its incredible lineup of statistics on this front. However, with a sluggish industry rank (among the bottom 42%) and a Zacks Rank #3, it is hard to get too excited about this company overall. In fact, over the past two years, the Zacks Finance- Investment Management industry has clearly underperformed the broader market, as you can see below:
So, value investors might want to wait for estimates, analyst sentiment and broader factors to turn around in this name first, but once that happens, this stock could be a compelling pick.
A Full-Blown Technological Breakthrough in the Making
Zacks’ Aggressive Growth Strategist Brian Bolan explores autonomous cars in our latest Special Report, Driverless Cars: Your Roadmap to Mega-Profits Today. In addition to who will be selling them and how the auto industry will be impacted, Brian reveals 8 stocks with tremendous gain potential to feed off this phenomenon. Click to see the stocks right now >>