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 rely on traditional forms of analysis on key valuation metrics to find stocks that they believe are undervalued, leaving room for profits.
Zacks has developed the innovative Style Scores system to highlight stocks with specific traits. For example, value investors will be interested in stocks with great grades in the "Value" category. When paired with a high Zacks Rank, "A" grades in the Value category are among the strongest value stocks on the market today.
One stock to keep an eye on is Southern Missouri Bancorp (SMBC - Free Report) . SMBC is currently sporting a Zacks Rank of #1 (Strong Buy), as well as an A grade for Value. The stock is trading with a P/E ratio of 8.54, which compares to its industry's average of 11.79. Over the last 12 months, SMBC's Forward P/E has been as high as 11.98 and as low as 6.81, with a median of 9.42.
Value investors also use the P/S ratio. The P/S ratio is is calculated as price divided by 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. SMBC has a P/S ratio of 1.62. This compares to its industry's average P/S of 1.98.
Finally, our model also underscores that SMBC has a P/CF ratio of 5.94. This data point considers a firm's operating cash flow and is frequently used to find companies that are undervalued when considering their solid cash outlook. This company's current P/CF looks solid when compared to its industry's average P/CF of 8.23. SMBC's P/CF has been as high as 10.89 and as low as 5.49, with a median of 9.72, all within the past year.
These figures are just a handful of the metrics value investors tend to look at, but they help show that Southern Missouri Bancorp is likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, SMBC feels like a great value stock at the moment.