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 put Greenhill & Co., Inc. 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, Greenhill has a trailing twelve months PE ratio of 13.79. This level compares pretty favorably with the market at large, as the PE ratio for the S&P 500 comes in at about 20.01.
If we focus on the long-term trend of the stock the current level puts Greenhill’s current PE near its lowest level over the observed period, which stands at 13.73. This suggests that the stock is undervalued compared to its own historical levels and thus it could be an extremely suitable entry point from the PE perspective.
Further, the stock’s PE also compares favorably with the Zacks classified Finance - Investment Bank industry’s trailing twelve months PE ratio, which stands at 14.62. At the very least, this indicates that the stock is relatively undervalued right now, compared to its peers.
PS 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, Greenhill has a P/S ratio of about 2.45. This is lower than the Zacks categorized Finance - Investment Bank industry average, which comes in at 4.16 right now.
If anything, GHL is in the lower end of its range in the time period from a P/S metric, suggesting some level of undervalued trading—at least compared to historical norms.
Broad Value Outlook
In aggregate, Greenhill currently has a Zacks Value Style Score of ‘B’, putting it into the top 40% of all stocks we cover from this look. This makes Greenhill an apt choice for value investors.
What About the Stock Overall?
Though Greenhill 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 grade of ‘A’ and a Momentum score of ‘F’. This gives GHL a Zacks VGM score—or its overarching fundamental grade—of ‘B’. (You can read more about the Zacks Style Scores here >>)
Meanwhile, the company’s earnings estimates have been mixed at best. The current quarter has seen one estimate go higher in the past thirty days compared to none lower, while the full year estimate has seen no upward revisions and one downward revision in the same time period.
This has had a meaningful impact on the consensus estimate as the current quarter consensus estimate has moved higher by 39.5% over the past month, while the full year estimate has decreased 4.7%. You can see the consensus estimate trend and recent price action for the stock in the chart below:
Greenhill & Co., Inc. Price and Consensus
This somewhat mixed trend is why the stock has just a Zacks Rank #3 (Hold) and why we are looking for in-line performance from the company in the near term.
Bottom Line
Greenhill is an inspired choice for value investors, as it is hard to beat its incredible lineup of statistics on this front.
Also, notably, the Finance – Investment Bank industry has clearly outperformed the broader market over the last one year, as you can see below:
Nevertheless, although boasting of a formidable industry rank (Top 16% out of more than 250 industries), the company’s Zacks Rank #3 somewhat dims the sparkle. So, value investors might want to wait for analyst sentiment to turn around in this name first, but once that happens, this stock could be a compelling pick.
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Will Greenhill (GHL) Prove to be a Suitable Value Pick?
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 put Greenhill & Co., Inc. 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, Greenhill has a trailing twelve months PE ratio of 13.79. This level compares pretty favorably with the market at large, as the PE ratio for the S&P 500 comes in at about 20.01.
If we focus on the long-term trend of the stock the current level puts Greenhill’s current PE near its lowest level over the observed period, which stands at 13.73. This suggests that the stock is undervalued compared to its own historical levels and thus it could be an extremely suitable entry point from the PE perspective.
Further, the stock’s PE also compares favorably with the Zacks classified Finance - Investment Bank industry’s trailing twelve months PE ratio, which stands at 14.62. At the very least, this indicates that the stock is relatively undervalued right now, compared to its peers.
PS 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, Greenhill has a P/S ratio of about 2.45. This is lower than the Zacks categorized Finance - Investment Bank industry average, which comes in at 4.16 right now.
If anything, GHL is in the lower end of its range in the time period from a P/S metric, suggesting some level of undervalued trading—at least compared to historical norms.
Broad Value Outlook
In aggregate, Greenhill currently has a Zacks Value Style Score of ‘B’, putting it into the top 40% of all stocks we cover from this look. This makes Greenhill an apt choice for value investors.
What About the Stock Overall?
Though Greenhill 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 grade of ‘A’ and a Momentum score of ‘F’. This gives GHL a Zacks VGM score—or its overarching fundamental grade—of ‘B’. (You can read more about the Zacks Style Scores here >>)
Meanwhile, the company’s earnings estimates have been mixed at best. The current quarter has seen one estimate go higher in the past thirty days compared to none lower, while the full year estimate has seen no upward revisions and one downward revision in the same time period.
This has had a meaningful impact on the consensus estimate as the current quarter consensus estimate has moved higher by 39.5% over the past month, while the full year estimate has decreased 4.7%. You can see the consensus estimate trend and recent price action for the stock in the chart below:
Greenhill & Co., Inc. Price and Consensus
Greenhill & Co., Inc. Price and Consensus | Greenhill & Co., Inc. Quote
This somewhat mixed trend is why the stock has just a Zacks Rank #3 (Hold) and why we are looking for in-line performance from the company in the near term.
Bottom Line
Greenhill is an inspired choice for value investors, as it is hard to beat its incredible lineup of statistics on this front.
Also, notably, the Finance – Investment Bank industry has clearly outperformed the broader market over the last one year, as you can see below:
Nevertheless, although boasting of a formidable industry rank (Top 16% out of more than 250 industries), the company’s Zacks Rank #3 somewhat dims the sparkle. So, value investors might want to wait for analyst sentiment to turn around in this name first, but once that happens, this stock could be a compelling pick.
Looking for Ideas with Even Greater Upside?
Today's investment ideas are short-term, directly based on our proven 1 to 3 month indicator. In addition, I invite you to consider our long-term opportunities. These rare trades look to start fast with strong Zacks Ranks, but carry through with double and triple-digit profit potential. Starting now, you can look inside our home run, value, and stocks under $10 portfolios, plus more. Click here for a peek at this private information >>