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 Shinhan Financial Group Co (SHG). SHG is currently sporting a Zacks Rank #1 (Strong Buy), as well as an A grade for Value. The stock holds a P/E ratio of 6.26, while its industry has an average P/E of 9.93. Over the last 12 months, SHG's Forward P/E has been as high as 7.09 and as low as 4.11, with a median of 5.60.
Investors will also notice that SHG has a PEG ratio of 0.51. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. SHG's PEG compares to its industry's average PEG of 0.76. Over the past 52 weeks, SHG's PEG has been as high as 0.74 and as low as 0.37, with a median of 0.52.
Value investors also use the P/S ratio. The P/S ratio is calculated as price divided by sales. Some people prefer this metric because sales are harder to manipulate on an income statement. This means it could be a truer performance indicator. SHG has a P/S ratio of 1.01. This compares to its industry's average P/S of 1.7.
Finally, we should also recognize that SHG has a P/CF ratio of 6.26. 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. SHG's current P/CF looks attractive when compared to its industry's average P/CF of 16.51. Over the past 52 weeks, SHG's P/CF has been as high as 6.57 and as low as 3.72, with a median of 4.44.
These are just a handful of the figures considered in Shinhan Financial Group Co'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 SHG is an impressive value stock right now.
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Shinhan Financial Group Co Ltd (SHG): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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