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 use fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.
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 company value investors might notice is Eagle Bancorp Montana (EBMT). EBMT is currently sporting a Zacks Rank of #2 (Buy), as well as a Value grade of A.
We should also highlight that EBMT has a P/B ratio of 0.79. 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 1.96. EBMT's P/B has been as high as 0.83 and as low as 0.60, with a median of 0.71, over the past year.
Value investors also use the P/S ratio. The P/S ratio is is calculated as price divided by sales. This is a prefered metric because revenue can't really be manipulated, so sales are often a truer performance indicator. EBMT has a P/S ratio of 1.13. This compares to its industry's average P/S of 1.83.
Finally, investors should note that EBMT has a P/CF ratio of 6.95. This metric takes into account a company's operating cash flow and can be used to find stocks that are undervalued based on their solid cash outlook. EBMT's P/CF compares to its industry's average P/CF of 15.04. Within the past 12 months, EBMT's P/CF has been as high as 7.56 and as low as 5.60, with a median of 6.55.
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 at 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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