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.
Considering these trends, value investing is clearly one of the most preferred ways to find strong stocks in any type of 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 stock to keep an eye on is Sierra Bancorp (BSRR). BSRR is currently sporting a Zacks Rank #2 (Buy) and an A for Value. The stock is trading with a P/E ratio of 9.59, which compares to its industry's average of 10.36. Over the past year, BSRR's Forward P/E has been as high as 12.25 and as low as 8.27, with a median of 10.20.
Another notable valuation metric for BSRR is its P/B ratio of 1.15. 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 1.26. Over the past year, BSRR's P/B has been as high as 1.37 and as low as 0.88, with a median of 1.15.
Value investors also frequently use the P/S ratio. This metric is found by dividing a stock's price with the company's revenue. This is a preferred metric because revenue can't really be manipulated, so sales are often a truer performance indicator. BSRR has a P/S ratio of 2.03. This compares to its industry's average P/S of 2.16.
Finally, investors will want to recognize that BSRR has a P/CF ratio of 8.86. 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 10.33. BSRR's P/CF has been as high as 11.60 and as low as 7.13, with a median of 9.26, all within the past year.
If you're looking for another solid Banks - West value stock, take a look at FS Bancorp (FSBW). FSBW is a Zacks Rank of #2 (Buy) stock with a Value score of A.
FS Bancorp sports a P/B ratio of 1.02 as well; this compares to its industry's price-to-book ratio of 1.26. In the past 52 weeks, FSBW's P/B has been as high as 1.31, as low as 0.92, with a median of 1.08.
These are only a few of the key metrics included in Sierra Bancorp and FS Bancorp strong Value grade, but they help show that the stocks are likely undervalued right now. When factoring in the strength of its earnings outlook, BSRR and FSBW look like an impressive value stock at the moment.
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Sierra Bancorp (BSRR): Free Stock Analysis Report FS Bancorp, Inc. (FSBW): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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