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.
Of these, value investing is easily one of the most popular ways to find great stocks in any market environment. Value investors use a variety of methods, including tried-and-true valuation metrics, to find these stocks.
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.
One stock to keep an eye on is Regional Management (RM). RM is currently holding a Zacks Rank of #2 (Buy) and a Value grade of A. The stock holds a P/E ratio of 6.15, while its industry has an average P/E of 8.44. Over the last 12 months, RM's Forward P/E has been as high as 8.34 and as low as 4.96, with a median of 5.84.
Investors should also recognize that RM has a P/B ratio of 0.89. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. This company's current P/B looks solid when compared to its industry's average P/B of 1.02. Over the past year, RM's P/B has been as high as 1.05 and as low as 0.74, with a median of 0.89.
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 prefered metric because revenue can't really be manipulated, so sales are often a truer performance indicator. RM has a P/S ratio of 0.56. This compares to its industry's average P/S of 1.31.
These figures are just a handful of the metrics value investors tend to look at, but they help show that Regional Management is likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, RM feels like a great value stock at the moment.
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Regional Management Corp. (RM): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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