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Are Investors Undervaluing Financial Institutions (FISI) Right Now?

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Here at Zacks, our focus is on the proven Zacks Rank system, which emphasizes earnings estimates and estimate revisions to find great stocks. Nevertheless, we are always paying attention to the latest value, growth, and momentum trends to underscore strong picks.

Of these, value investing is easily one of the most popular ways to find great stocks in any market environment. Value investors use a variety of methods, including tried-and-true valuation metrics, to find these stocks.

On top of the Zacks Rank, investors can also look at our innovative Style Scores system to find stocks with specific traits. For example, value investors will want to focus on the "Value" category. Stocks with high Zacks Ranks and "A" grades for Value will be some of the highest-quality value stocks on the market today.

One company to watch right now is Financial Institutions (FISI - Free Report) . FISI is currently holding a Zacks Rank of #1 (Strong Buy) and a Value grade of A. The stock is trading with a P/E ratio of 8.17, which compares to its industry's average of 10.13. Over the last 12 months, FISI's Forward P/E has been as high as 14.41 and as low as 5.16, with a median of 10.17.

Another notable valuation metric for FISI is its P/B ratio of 0.66. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. FISI's current P/B looks attractive when compared to its industry's average P/B of 0.92. FISI's P/B has been as high as 1.28 and as low as 0.53, with a median of 1.13, over the past year.

Value investors also love the P/S ratio, which is calculated by simply dividing a stock's price with the company's sales. This is a prefered metric because revenue can't really be manipulated, so sales are often a truer performance indicator. FISI has a P/S ratio of 1.35. This compares to its industry's average P/S of 1.94.

Finally, investors should note that FISI has a P/CF ratio of 5.82. This metric takes into account a company's operating cash flow and can be used to find stocks that are undervalued based on their solid cash outlook. This company's current P/CF looks solid when compared to its industry's average P/CF of 11.35. Over the past year, FISI's P/CF has been as high as 9.62 and as low as 3.88, with a median of 8.27.

Value investors will likely look at more than just these metrics, but the above data helps show that Financial Institutions is likely undervalued currently. And when considering the strength of its earnings outlook, FISI sticks out at as one of the market's strongest value stocks.


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