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Should Value Investors Buy Central Pacific Financial (CPF) 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 use a variety of methods, including tried-and-true valuation metrics, to find these stocks.

On top of the Zacks Rank, investors can also look at our innovative Style Scores system to find stocks with specific traits. For example, value investors will want to focus on the "Value" category. Stocks with high Zacks Ranks and "A" grades for Value will be some of the highest-quality value stocks on the market today.

Central Pacific Financial (CPF - Free Report) is a stock many investors are watching right now. CPF is currently sporting a Zacks Rank of #2 (Buy), as well as an A grade for Value. The stock is trading with a P/E ratio of 13.47, which compares to its industry's average of 13.57. Over the past 52 weeks, CPF's Forward P/E has been as high as 17.36 and as low as 8.27, with a median of 14.18.

Investors should also recognize that CPF has a P/B ratio of 0.84. 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 attractive against its industry's average P/B of 1.57. CPF's P/B has been as high as 1.72 and as low as 0.68, with a median of 1.55, 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. CPF has a P/S ratio of 1.75. This compares to its industry's average P/S of 2.31.

Finally, we should also recognize that CPF has a P/CF ratio of 6.49. 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. CPF's current P/CF looks attractive when compared to its industry's average P/CF of 11.93. CPF's P/CF has been as high as 11.20 and as low as 4.72, with a median of 10.41, 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 Central Pacific Financial is likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, CPF feels like a great value stock at the moment.


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