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.
Looking at the history of these trends, perhaps none is more beloved than value investing. This strategy simply looks to identify companies that are being undervalued by the broader market. Value investors use fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.
Luckily, Zacks has developed its own Style Scores system in an effort to find stocks with specific traits. Value investors will be interested in the system's "Value" category. Stocks with both "A" grades in the Value category and high Zacks Ranks are among the strongest value stocks on the market right now.
One stock to keep an eye on is First Bancorp (FBP - Free Report) . FBP is currently holding a Zacks Rank of #2 (Buy) and a Value grade of A. The stock is trading with a P/E ratio of 7.84, which compares to its industry's average of 10.96. Over the last 12 months, FBP's Forward P/E has been as high as 14.12 and as low as 4.10, with a median of 9.82.
We also note that FBP holds a PEG ratio of 1.40. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. FBP's industry currently sports an average PEG of 1.78. Over the past 52 weeks, FBP's PEG has been as high as 2.93 and as low as 0.21, with a median of 1.08.
We should also highlight that FBP has a P/B ratio of 0.58. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. This stock's P/B looks attractive against its industry's average P/B of 0.91. Over the past year, FBP's P/B has been as high as 1.10 and as low as 0.37, with a median of 0.82.
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. FBP has a P/S ratio of 1.64. This compares to its industry's average P/S of 1.84.
Finally, investors should note that FBP has a P/CF ratio of 9.80. This figure highlights a company's operating cash flow and can be used to find firms that are undervalued when considering their impressive cash outlook. FBP's current P/CF looks attractive when compared to its industry's average P/CF of 11. FBP's P/CF has been as high as 12.57 and as low as 4.43, with a median of 9.19, all within the past year.
Value investors will likely look at more than just these metrics, but the above data helps show that First Bancorp is likely undervalued currently. And when considering the strength of its earnings outlook, FBP sticks out at as one of the market's strongest value stocks.