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Should Value Investors Buy FS KKR Capital (FSK) Stock?

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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, perhaps no stock market trend is more popular than value investing, which is a strategy that has proven to be successful in all sorts of market environments. 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 stock to keep an eye on is FS KKR Capital (FSK - Free Report) . FSK is currently holding a Zacks Rank of #2 (Buy) and a Value grade of A. The stock holds a P/E ratio of 4.14, while its industry has an average P/E of 10.43. Over the past 52 weeks, FSK's Forward P/E has been as high as 8.35 and as low as 3.04, with a median of 7.75.

Investors should also note that FSK holds a PEG ratio of 2.60. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. FSK's PEG compares to its industry's average PEG of 3.96. Over the past 52 weeks, FSK's PEG has been as high as 2.78 and as low as 2.47, with a median of 2.60.

Another notable valuation metric for FSK is its P/B ratio of 0.42. 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 1.13. Over the past 12 months, FSK's P/B has been as high as 0.83 and as low as 0.31, with a median of 0.76.

Value investors also use the P/S ratio. The P/S ratio is is calculated as price divided by sales. This is a prefered metric because revenue can't really be manipulated, so sales are often a truer performance indicator. FSK has a P/S ratio of 2.13. This compares to its industry's average P/S of 2.8.

Finally, our model also underscores that FSK has a P/CF ratio of 6.53. 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 stock's P/CF looks attractive against its industry's average P/CF of 8.23. Over the past year, FSK's P/CF has been as high as 12.68 and as low as 3.33, with a median of 4.63.

Value investors will likely look at more than just these metrics, but the above data helps show that FS KKR Capital is likely undervalued currently. And when considering the strength of its earnings outlook, FSK sticks out at as one of the market's strongest value stocks.


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