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Is FS Bancorp (FSBW) Stock Undervalued Right Now?

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While the proven Zacks Rank places an emphasis on earnings estimates and estimate revisions to find strong stocks, we also know that investors tend to develop their own individual strategies. With this in mind, we are always looking at value, growth, and momentum trends to discover great companies.

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 tried-and-true metrics and fundamental analysis to find companies that they believe are undervalued at their current share price levels.

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 FS Bancorp (FSBW - Free Report) . FSBW is currently sporting a Zacks Rank of #1 (Strong Buy), as well as an A grade for Value. The stock has a Forward P/E ratio of 7.71. This compares to its industry's average Forward P/E of 11.47. Over the last 12 months, FSBW's Forward P/E has been as high as 10.09 and as low as 6.99, with a median of 8.20.

Investors should also recognize that FSBW has a P/B ratio of 1.29. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. FSBW's current P/B looks attractive when compared to its industry's average P/B of 1.70. FSBW's P/B has been as high as 1.30 and as low as 0.95, with a median of 1.04, 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 popular metric because sales are harder to manipulate on an income statement, so they are often considered a better performance indicator. FSBW has a P/S ratio of 2.08. This compares to its industry's average P/S of 2.77.

Finally, investors should note that FSBW has a P/CF ratio of 6.51. This metric focuses on a firm's operating cash flow and is often used to find stocks that are undervalued based on the strength of their cash outlook. FSBW's current P/CF looks attractive when compared to its industry's average P/CF of 9.93. Over the past 52 weeks, FSBW's P/CF has been as high as 6.57 and as low as 4.66, with a median of 5.24.

These figures are just a handful of the metrics value investors tend to look at, but they help show that FS Bancorp is likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, FSBW feels like a great value stock at the moment.

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