Here at Zacks, we focus on our proven ranking system, which places an emphasis on earnings estimates and estimate revisions, to find winning stocks. But we also understand that investors develop their own strategies, so we are constantly looking at the latest trends in value, growth, and momentum to find strong companies for our readers.
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 rely on traditional forms of analysis on key valuation metrics to find stocks that they believe are undervalued, leaving room for profits.
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 First Guaranty Bancshares (FGBI). FGBI is currently sporting a Zacks Rank of #2 (Buy) and an A for Value. The stock holds a P/E ratio of 8.08, while its industry has an average P/E of 13.01. Over the past 52 weeks, FGBI's Forward P/E has been as high as 12.03 and as low as 6.32, with a median of 9.66.
Investors should also recognize that FGBI has a P/B ratio of 0.86. 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. This company's current P/B looks solid when compared to its industry's average P/B of 1.65. Within the past 52 weeks, FGBI's P/B has been as high as 1.30 and as low as 0.60, with a median of 1.15.
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. FGBI has a P/S ratio of 1.24. This compares to its industry's average P/S of 1.72.
Finally, investors should note that FGBI has a P/CF ratio of 7.66. This metric takes into account a company's operating cash flow and can be used to find stocks that are undervalued based on their solid cash outlook. This stock's P/CF looks attractive against its industry's average P/CF of 13.42. Over the past year, FGBI's P/CF has been as high as 11.56 and as low as 5.91, with a median of 10.33.
These are just a handful of the figures considered in First Guaranty Bancshares's great Value grade. Still, they help show that the stock is likely being undervalued at the moment. Add this to the strength of its earnings outlook, and we can clearly see that FGBI is an impressive value stock right now.