Should Value Investors Buy First Financial Ban (FFBC) Stock?

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.

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.

In addition to the Zacks Rank, investors looking for stocks with specific traits can utilize our Style Scores system. Of course, value investors will be most interested in the system's "Value" category. Stocks with "A" grades for Value and high Zacks Ranks are among the best value stocks available at any given moment.

One company to watch right now is First Financial Ban (FFBC). FFBC is currently holding a Zacks Rank #2 (Buy) and a Value grade of A. The stock has a Forward P/E ratio of 8.72. This compares to its industry's average Forward P/E of 9.94. Over the last 12 months, FFBC's Forward P/E has been as high as 12.20 and as low as 7.99, with a median of 9.35.

Another valuation metric that we should highlight is FFBC's P/B ratio of 0.99. 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. This stock's P/B looks solid versus its industry's average P/B of 1.94. Within the past 52 weeks, FFBC's P/B has been as high as 1.18 and as low as 0.84, with a median of 0.98.

Value investors also love the P/S ratio, which is calculated by simply dividing a stock's price with the company's 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. FFBC has a P/S ratio of 1.84. This compares to its industry's average P/S of 2.

Finally, we should also recognize that FFBC has a P/CF ratio of 9.43. 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 company's current P/CF looks solid when compared to its industry's average P/CF of 14.26. Within the past 12 months, FFBC's P/CF has been as high as 11.32 and as low as 8.07, with a median of 9.21.

Farmers National Banc (FMNB) may be another strong Banks - Midwest stock to add to your shortlist. FMNB is a Zacks Rank of #2 (Buy) stock with a Value grade of A.

Additionally, Farmers National Banc has a P/B ratio of 1.25 while its industry's price-to-book ratio sits at 1.94. For FMNB, this valuation metric has been as high as 1.49, as low as 1.04, with a median of 1.22 over the past year.

These are only a few of the key metrics included in First Financial Ban and Farmers National Banc strong Value grade, but they help show that the stocks are likely undervalued right now. When factoring in the strength of its earnings outlook, FFBC and FMNB look like an impressive value stock at the moment.

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This article originally published on Zacks Investment Research (zacks.com).

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