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.
Considering these trends, value investing is clearly one of the most preferred ways to find strong stocks in any type of market. Value investors rely on traditional forms of analysis on key valuation metrics to find stocks that they believe are undervalued, leaving room for profits.
Luckily, Zacks has developed its own Style Scores system in an effort to find stocks with specific traits. Value investors will be interested in the system's "Value" category. Stocks with both "A" grades in the Value category and high Zacks Ranks are among the strongest value stocks on the market right now.
One company value investors might notice is First Community (FCCO - Free Report) . FCCO is currently sporting a Zacks Rank of #2 (Buy) and an A for Value.
We should also highlight that FCCO has a P/B ratio of 1.21. 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. FCCO's current P/B looks attractive when compared to its industry's average P/B of 1.57. FCCO's P/B has been as high as 1.68 and as low as 1.15, with a median of 1.27, over the past year.
Value investors also use the P/S ratio. The P/S ratio is is calculated as price divided by 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. FCCO has a P/S ratio of 2.6. This compares to its industry's average P/S of 2.87.
Finally, our model also underscores that FCCO has a P/CF ratio of 9.43. 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 12.82. FCCO's P/CF has been as high as 13.34 and as low as 8.77, with a median of 9.63, all within the past year.
These figures are just a handful of the metrics value investors tend to look at, but they help show that First Community is likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, FCCO feels like a great value stock at the moment.