The proven Zacks Rank system focuses on earnings estimates and estimate revisions to find winning stocks. Nevertheless, we know that our readers all have their own perspectives, so we are always looking at the latest trends in value, growth, and momentum to find strong picks.
Of these, value investing is easily one of the most popular ways to find great stocks in any market environment. Value investors use tried-and-true metrics and fundamental analysis to find companies that they believe are undervalued at their current share price levels.
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 FS Bancorp (FSBW). FSBW is currently sporting a Zacks Rank #2 (Buy), as well as a Value grade of A. The stock is trading with P/E ratio of 10.07 right now. For comparison, its industry sports an average P/E of 11.13. Over the past 52 weeks, FSBW's Forward P/E has been as high as 10.94 and as low as 7.73, with a median of 9.27.
Another valuation metric that we should highlight is FSBW's P/B ratio of 1.11. 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. FSBW's current P/B looks attractive when compared to its industry's average P/B of 1.35. Over the past 12 months, FSBW's P/B has been as high as 1.31 and as low as 0.92, with a median of 1.08.
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 preferred metric because revenue can't really be manipulated, so sales are often a truer performance indicator. FSBW has a P/S ratio of 1.59. This compares to its industry's average P/S of 2.3.
Finally, our model also underscores that FSBW has a P/CF ratio of 7.50. This data point considers a firm's operating cash flow and is frequently used to find companies that are undervalued when considering their solid cash outlook. FSBW's P/CF compares to its industry's average P/CF of 11.11. Within the past 12 months, FSBW's P/CF has been as high as 7.90 and as low as 5.39, with a median of 6.86.
These are only a few of the key metrics included in FS Bancorp's strong Value grade, but they help show that the stock is likely undervalued right now. When factoring in the strength of its earnings outlook, FSBW looks like an impressive value stock at the moment.
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FS Bancorp, Inc. (FSBW): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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