While the proven Zacks Rank places an emphasis on earnings estimates and estimate revisions to find strong stocks, we also know that investors tend to develop their own individual strategies. With this in mind, we are always looking at value, growth, and momentum trends to discover great companies.
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 use tried-and-true metrics and fundamental analysis to find companies that they believe are undervalued at their current share price levels.
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.
Eagle Bancorp Montana (EBMT) is a stock many investors are watching right now. EBMT is currently sporting a Zacks Rank #2 (Buy), as well as an A grade for Value. The stock is trading with a P/E ratio of 9.73, which compares to its industry's average of 11.02. Over the last 12 months, EBMT's Forward P/E has been as high as 13.92 and as low as 8.84, with a median of 10.18.
Another notable valuation metric for EBMT is its P/B ratio of 0.77. 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. EBMT's current P/B looks attractive when compared to its industry's average P/B of 2.11. Over the past 12 months, EBMT's P/B has been as high as 0.83 and as low as 0.67, with a median of 0.75.
Value investors also use the P/S ratio. The P/S ratio 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. EBMT has a P/S ratio of 1.11. This compares to its industry's average P/S of 2.06.
Finally, our model also underscores that EBMT has a P/CF ratio of 6.10. 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 15.45. Over the past year, EBMT's P/CF has been as high as 7.56 and as low as 5.51, with a median of 6.46.
Value investors will likely look at more than just these metrics, but the above data helps show that Eagle Bancorp Montana is likely undervalued currently. And when considering the strength of its earnings outlook, EBMT sticks out as one of the market's strongest value stocks.
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Eagle Bancorp Montana, Inc. (EBMT): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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