Here at Zacks, we focus on our proven ranking system, which places an emphasis on earnings estimates and estimate revisions, to find winning stocks. But we also understand that investors develop their own strategies, so we are constantly looking at the latest trends in value, growth, and momentum to find strong companies for our readers.
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.
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 company to watch right now is Financial Institutions (FISI - Free Report) . FISI is currently sporting a Zacks Rank of #2 (Buy) and an A for Value. The stock has a Forward P/E ratio of 8.02. This compares to its industry's average Forward P/E of 10.07. FISI's Forward P/E has been as high as 14.41 and as low as 5.16, with a median of 9.80, all within the past year.
Investors should also recognize that FISI has a P/B ratio of 0.65. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. This stock's P/B looks solid versus 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 1.02, 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. Some people prefer this metric because sales are harder to manipulate on an income statement. This means it could be a truer performance indicator. FISI has a P/S ratio of 1.35. This compares to its industry's average P/S of 1.86.
Finally, investors will want to recognize that FISI has a P/CF ratio of 5.76. 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. This company's current P/CF looks solid when compared to its industry's average P/CF of 11.35. Within the past 12 months, FISI's P/CF has been as high as 9.62 and as low as 3.88, with a median of 7.31.
These are just a handful of the figures considered in Financial Institutions's great Value grade. Still, they help show that the stock is likely being undervalued at the moment. Add this to the strength of its earnings outlook, and we can clearly see that FISI is an impressive value stock right now.