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 Macro Bank Inc. (BMA - Free Report) 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, Macro Bank has a trailing twelve months PE ratio of 11.80, as you can see in the chart below:
This level compares favorably with the market at large, as the PE for the S&P 500 stands at about 20.22. If we focus on the long-term PE trend, Macro Bank’s current PE level puts it above its midpoint over the past five years, with the number having risen rapidly over the past few months.
Further, the stock’s PE also compares favorably with the Zacks classified Banks-Foreign industry’s trailing twelve months PE ratio, which stands at 19.95. This indicates that the stock is relatively undervalued right now, compared to its peers.
We should also point out that Macro Bank has a forward PE ratio (price relative to this year’s earnings) of just 10.36, so it is fair to say that a slightly more value-oriented path may be ahead for this stock in the near term.
P/CF Ratio
An often overlooked ratio that can still be a great indicator of value is the price/cash flow metric. This ratio doesn’t take amortization and depreciation into account, so can give a more accurate picture of the financial health in a business. This is a preferred metric to some valuation investors because cash flows are (a) generally less prone to manipulation by the company’s management and (b) are less affected by variation in accounting policies between different companies.
The ratio is generally applied to find out whether a company’s stock is overpriced or underpriced with reference to its cash flows generation potential compared with its competitors. However, it is not commonly used for cross-industry comparison, as the average price to cash flow ratio varies from industry to industry.
In this case, Macro Bank’s P/CF ratio of 13.25 is lower than the Zacks classified Banks-Foreign industry’s average of 19.95, which indicates that the stock is undervalued in this respect.
Broad Value Outlook
In aggregate, Macro Bank 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 Macro Bank a good choice for value investors, and some of its other key metrics make this pretty clear too.
What About the Stock Overall?
Though Macro Bank 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 ‘F’. This gives BMA 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 quarter has seen one upward and downward estimate revisions in the past sixty days, while the current year estimate has seen two upward and no downward revisions in the same time frame.
As a result, the current quarter consensus estimate has moved down by 2.3% over the past two months, while the current year estimate has inched higher by 2.4%. You can see the consensus estimate trend and recent price action for the stock in the chart below:
Macro Bank Inc. Price and Consensus
So, value investors might want to wait for broader factors to turn favorable in this name first, but once that happen, this stock could be a compelling pick
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It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.
This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.
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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 Macro Bank Inc. (BMA - Free Report) 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, Macro Bank has a trailing twelve months PE ratio of 11.80, as you can see in the chart below:
This level compares favorably with the market at large, as the PE for the S&P 500 stands at about 20.22. If we focus on the long-term PE trend, Macro Bank’s current PE level puts it above its midpoint over the past five years, with the number having risen rapidly over the past few months.
Further, the stock’s PE also compares favorably with the Zacks classified Banks-Foreign industry’s trailing twelve months PE ratio, which stands at 19.95. This indicates that the stock is relatively undervalued right now, compared to its peers.
We should also point out that Macro Bank has a forward PE ratio (price relative to this year’s earnings) of just 10.36, so it is fair to say that a slightly more value-oriented path may be ahead for this stock in the near term.
P/CF Ratio
An often overlooked ratio that can still be a great indicator of value is the price/cash flow metric. This ratio doesn’t take amortization and depreciation into account, so can give a more accurate picture of the financial health in a business. This is a preferred metric to some valuation investors because cash flows are (a) generally less prone to manipulation by the company’s management and (b) are less affected by variation in accounting policies between different companies.
The ratio is generally applied to find out whether a company’s stock is overpriced or underpriced with reference to its cash flows generation potential compared with its competitors. However, it is not commonly used for cross-industry comparison, as the average price to cash flow ratio varies from industry to industry.
In this case, Macro Bank’s P/CF ratio of 13.25 is lower than the Zacks classified Banks-Foreign industry’s average of 19.95, which indicates that the stock is undervalued in this respect.
Broad Value Outlook
In aggregate, Macro Bank 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 Macro Bank a good choice for value investors, and some of its other key metrics make this pretty clear too.
What About the Stock Overall?
Though Macro Bank 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 ‘F’. This gives BMA 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 quarter has seen one upward and downward estimate revisions in the past sixty days, while the current year estimate has seen two upward and no downward revisions in the same time frame.
As a result, the current quarter consensus estimate has moved down by 2.3% over the past two months, while the current year estimate has inched higher by 2.4%. You can see the consensus estimate trend and recent price action for the stock in the chart below:
Macro Bank Inc. Price and Consensus
So, value investors might want to wait for broader factors to turn favorable in this name first, but once that happen, this stock could be a compelling pick
More Stock News: 8 Companies Verge on Apple-Like Run
Did you miss Apple's 9X stock explosion after they launched their iPhone in 2007? Now 2017 looks to be a pivotal year to get in on another emerging technology expected to rock the market. Demand could soar from almost nothing to $42 billion by 2025. Reports suggest it could save 10 million lives per decade which could in turn save $200 billion in U.S. healthcare costs.
A bonus Zacks Special Report names this breakthrough and the 8 best stocks to exploit it. Like Apple in 2007, these companies are already strong and coiling for potential mega-gains. Click to see them right now >>
Zacks Names "Single Best Pick to Double"
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.
This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.
Free: See Our Top Stock and 4 Runners Up >>
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