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.
Luckily, Zacks has developed its own Style Scores system in an effort to find stocks with specific traits. Value investors will be interested in the system's "Value" category. Stocks with both "A" grades in the Value category and high Zacks Ranks are among the strongest value stocks on the market right now.
One stock to keep an eye on is Midland States Bancorp (MSBI). MSBI is currently sporting a Zacks Rank #2 (Buy), as well as a Value grade of A. The stock is trading with a P/E ratio of 7.29, which compares to its industry's average of 9.60. MSBI's Forward P/E has been as high as 11.26 and as low as 5.82, with a median of 7.31, all within the past year.
Another notable valuation metric for MSBI is its P/B ratio of 0.84. 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. This stock's P/B looks solid versus its industry's average P/B of 1.11. Over the past year, MSBI's P/B has been as high as 0.89 and as low as 0.62, with a median of 0.79.
Value investors also love the P/S ratio, which is calculated by simply dividing a stock's price with the company's 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. MSBI has a P/S ratio of 1. This compares to its industry's average P/S of 1.96.
These figures are just a handful of the metrics value investors tend to look at, but they help show that Midland States Bancorp is likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, MSBI feels like a great value stock at the moment.
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Midland States Bancorp, Inc. (MSBI): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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