Back to top

Image: Bigstock

Should Value Investors Choose Equity Bancshares (EQBK) Stock?

Read MoreHide Full Article

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 Equity Bancshares, Inc. (EQBK - 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, Equity Bancshares has a trailing twelve months PE ratio of 15.73, as you can see in the chart below:


 
This level actually compares favorably with the market at large, as the PE for the S&P 500 stands at about 29.73. If we focus on the long-term PE trend Equity Bancshares’ current PE level puts it below its midpoint over the past five years. Moreover, the current level is fairly below the highs for this stock, suggesting it might be a good entry point.


 
However, the stock’s PE also compares unfavorably with the Zacks Finance sector’s trailing twelve months PE ratio, which stands at 20.56. At the very least, this indicates that the stock is slightly undervalued right now, compared to its peers.


 
We should also point out that Equity Bancshares has a forward PE ratio (price relative to this year’s earnings) of just 12.49, so it is fair to say that a slightly more value-oriented path may be ahead for Equity Bancshares’ stock in the near term too.

P/S Ratio

Another key metric to note is the Price/Sales ratio. This approach compares a given stock’s price to its total sales, where a lower reading is generally considered better. Some people like this metric more than other value-focused ones because it looks at sales, something that is far harder to manipulate with accounting tricks than earnings.

Right now, Equity Bancshares has a P/S ratio of about 2.3. This is substantially lower than the S&P 500 average, which comes in at 5.22 right now. Also, as we can see in the chart below, this is somewhat below the highs for this stock in particular over the past few years.

Broad Value Outlook

In aggregate, Equity Bancshares currently has a Value Score of A, putting it into the top 20% of all stocks we cover from this look. This makes Equity Bancshares a solid choice for value investors, and some of its other key metrics make this pretty clear too.

For example, the P/CF ratio for Equity Bancshares comes in at 2.75, which is better than the industry average of 11.59. Clearly, EQBK is a solid choice on the value front from multiple angles.

What About the Stock Overall?

Though Equity Bancshares 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 Score of C and Momentum Score of A. This gives Equity Bancshares a Zacks VGM score — or its overarching fundamental grade — of A. (You can read more about the Zacks Style Scores here >>)

Meanwhile, the company’s recent earnings estimates have been encouraging. The current year estimate witnessed one upward revision in the past sixty days compared to one downward revision, while the full year 2022 estimate witnessed one upward revision compared to no downward revision in the same time period.

This has had a noticeable impact on the consensus estimate, as the current year consensus estimate remained unchanged in the past two months, whereas the full year 2022 estimate improved 0.5% in the past two months. You can see the consensus estimate trend and recent price action for the stock in the chart below:

Equity Bancshares, Inc. Price and Consensus

Even with better estimate trends, the stock has a Zacks Rank #3 (Hold), which is why we are looking for in-line performance from the company in the near term.

Bottom Line

Equity Bancshares is an inspired choice for value investors, as it is hard to beat its incredible lineup of statistics on this front. However, with a Zacks Rank #3, it is hard to get too excited about this company overall. In fact, over the past two years, the sector has clearly underperformed the market at large, as you can see below:


 
So, value investors might want to wait for estimates, analyst sentiment and broader factors to turn around in this name first, but once that happens, this stock could be a compelling pick.

Time to Invest in Legal Marijuana

If you’re looking for big gains, there couldn’t be a better time to get in on a young industry primed to skyrocket from $17.7 billion back in 2019 to an expected $73.6 billion by 2027.

After a clean sweep of 6 election referendums in 5 states, pot is now legal in 36 states plus D.C. Federal legalization is expected soon and that could be a still greater bonanza for investors. Even before the latest wave of legalization, Zacks Investment Research has recommended pot stocks that have shot up as high as +285.9%

You’re invited to check out Zacks’ Marijuana Moneymakers: An Investor’s Guide. It features a timely Watch List of pot stocks and ETFs with exceptional growth potential.

Today, Download Marijuana Moneymakers FREE >>


See More Zacks Research for These Tickers


Normally $25 each - click below to receive one report FREE:


Equity Bancshares, Inc. (EQBK) - free report >>

Published in