Here at Zacks, our focus is on the proven Zacks Rank system, which emphasizes earnings estimates and estimate revisions to find great stocks. Nevertheless, we are always paying attention to the latest value, growth, and momentum trends to underscore strong picks.
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.
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.
Macatawa Bank (MCBC - Free Report) is a stock many investors are watching right now. MCBC is currently sporting a Zacks Rank of #2 (Buy) and an A for Value.
Investors should also note that MCBC holds a PEG ratio of 1.48. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. MCBC's PEG compares to its industry's average PEG of 2.77. MCBC's PEG has been as high as 1.58 and as low as 1.44, with a median of 1.49, all within the past year.
Another notable valuation metric for MCBC is its P/B ratio of 1. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. This stock's P/B looks attractive against its industry's average P/B of 2.26. Over the past year, MCBC's P/B has been as high as 1.85 and as low as 1, with a median of 1.68.
Value investors also frequently use the P/S ratio. This metric is found by dividing a stock's price with the company's revenue. Some people prefer this metric because sales are harder to manipulate on an income statement. This means it could be a truer performance indicator. MCBC has a P/S ratio of 0.87. This compares to its industry's average P/S of 1.72.
Finally, investors will want to recognize that MCBC has a P/CF ratio of 6.77. This metric focuses on a firm's operating cash flow and is often used to find stocks that are undervalued based on the strength of their cash outlook. This company's current P/CF looks solid when compared to its industry's average P/CF of 13.84. MCBC's P/CF has been as high as 11.84 and as low as 6.35, with a median of 10.72, all within the past year.
These are only a few of the key metrics included in Macatawa Bank's strong Value grade, but they help show that the stock is likely undervalued right now. When factoring in the strength of its earnings outlook, MCBC looks like an impressive value stock at the moment.