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.
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 Shore Bancshares (SHBI). SHBI is currently sporting a Zacks Rank #2 (Buy), as well as an A grade for Value.
Investors should also recognize that SHBI has a P/B ratio of 1.02. The P/B ratio is used to compare a stock's market value with its book value, which is defined as total assets minus total liabilities. SHBI's current P/B looks attractive when compared to its industry's average P/B of 1.06. SHBI's P/B has been as high as 1.09 and as low as 0.71, with a median of 0.93, over the past year.
Value investors also use the P/S ratio. The P/S ratio is calculated as price divided by sales. This is a preferred metric because revenue can't really be manipulated, so sales are often a truer performance indicator. SHBI has a P/S ratio of 1.74. This compares to its industry's average P/S of 1.88.
Finally, our model also underscores that SHBI has a P/CF ratio of 10.40. 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. SHBI's current P/CF looks attractive when compared to its industry's average P/CF of 17.43. Within the past 12 months, SHBI's P/CF has been as high as 13.50 and as low as 7.80, with a median of 9.84.
These are just a handful of the figures considered in Shore Bancshares'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 SHBI is an impressive value stock right now.
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Shore Bancshares Inc (SHBI): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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