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 CYS Investments, 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, CYS Investments has a trailing twelve months PE ratio of 7.81, 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 20.04. If we focus on the long-term PE trend, CYS Investments’ current PE level puts it below its midpoint over the past five years.



Further, the stock’s PE also compares favorably with the Zacks classified REIT-Mortgage Trust industry trailing twelve months PE ratio, which stands at 10.22. At the very least, this indicates that the stock is relatively undervalued right now, compared to its peers.



We should also point out that CYS Investments has a forward PE ratio (price relative to this year’s earnings) of 7.54, so it is fair to say that a slightly more value-oriented path may be ahead for CYS Investments stock in the near term too.

PEG Ratio

While earnings are certainly important, it is essential to know how much you are paying for the growth of earnings as well. One can easily do that with the PEG ratio (ratio of the P/E to the expected future earnings growth rate).The PEG ratio gives a more complete picture of the valuation of a stock than the P/E ratio.

CYS Investments’ PEG ratio stands at just 1.50, compared with the Zacks REIT-Mortgage Trust industry average of 2.27. This suggests a decent undervalued trading relative to its earnings growth potential right now.



Broad Value Outlook

In aggregate, CYS Investments 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 CYS Investments a good choice for value investors, and some of its other key metrics make this pretty clear too.

For example, the Price/Sales ratio (P/S ratio) for CYS Investments is 6.98, a level that is lower than the industry average of 7.10. The P/S ratio compares a given stock’s price to its total sales, where a lower reading is generally considered better.

What About the Stock Overall?

Though CYS Investments 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 ‘D’ and a Momentum score of ‘F’. This gives CYS a Zacks VGM score—or its overarching fundamental grade—of ‘C’. (You can read more about the Zacks Style Scores here >>)

Meanwhile, the company’s recent earnings estimate has been mostly bullish. The full year estimate has seen two upward revisions and none downward in the past sixty days.

As a result the consensus estimate for the full year has inched higher by 6.9% in the last two months. You can see the consensus estimate trend and recent price action for the stock in the chart below:

CYS Investments, Inc. Price and Consensus

This bullish trend is why the stock boasts a Zacks Rank #2 (Buy) and why we are expecting outperformance from the company in the near term.

Bottom Line

CYS Investments is an inspired choice for value investors, as it is hard to beat its incredible lineup of statistics on this front. Along with a Zacks Rank #2, the stock belongs to an industry which is ranked among the Top 35% (out of more than 250 industries). This indicates that broader factors are favorable too for the company.

So, it might pay for value investors to delve deeper into the company’s prospects, as fundamentals indicate that this stock could be a compelling pick.

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