Back to top

Image: Bigstock

Should Value Investors Buy First Horizon (FHN) Stock?

Read MoreHide Full Article

The proven Zacks Rank system focuses on earnings estimates and estimate revisions to find winning stocks. Nevertheless, we know that our readers all have their own perspectives, so we are always looking at the latest trends in value, growth, and momentum to find 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 fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.

In addition to the Zacks Rank, investors looking for stocks with specific traits can utilize our Style Scores system. Of course, value investors will be most interested in the system's "Value" category. Stocks with "A" grades for Value and high Zacks Ranks are among the best value stocks available at any given moment.

One stock to keep an eye on is First Horizon (FHN - Free Report) . FHN is currently sporting a Zacks Rank of #2 (Buy), as well as a Value grade of A. The stock is trading with a P/E ratio of 9.56, which compares to its industry's average of 12.26. Over the past year, FHN's Forward P/E has been as high as 13.13 and as low as 5.20, with a median of 8.95.

Another valuation metric that we should highlight is FHN's P/B ratio of 0.88. 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. This stock's P/B looks solid versus its industry's average P/B of 1.84. FHN's P/B has been as high as 1.77 and as low as 0.66, with a median of 0.83, 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. FHN has a P/S ratio of 1.56. This compares to its industry's average P/S of 1.76.

Finally, investors should note that FHN has a P/CF ratio of 7.67. This data point considers a firm's operating cash flow and is frequently used to find companies that are undervalued when considering their solid cash outlook. FHN's P/CF compares to its industry's average P/CF of 17.12. Over the past year, FHN's P/CF has been as high as 14.25 and as low as 5.03, with a median of 6.26.

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


See More Zacks Research for These Tickers


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


First Horizon Corporation (FHN) - free report >>

Published in