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Is Banco Macro (BMA) Stock Undervalued Right Now?

Zacks Equity Research

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.

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.

Zacks has developed the innovative Style Scores system to highlight stocks with specific traits. For example, value investors will be interested in stocks with great grades in the "Value" category. When paired with a high Zacks Rank, "A" grades in the Value category are among the strongest value stocks on the market today.

One company to watch right now is Banco Macro (BMA). BMA is currently holding a Zacks Rank of #1 (Strong Buy) and a Value grade of A. The stock is trading with P/E ratio of 3.28 right now. For comparison, its industry sports an average P/E of 9.80. Over the past year, BMA's Forward P/E has been as high as 8.86 and as low as 2.53, with a median of 5.52.

Investors should also recognize that BMA has a P/B ratio of 1.14. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. BMA's current P/B looks attractive when compared to its industry's average P/B of 1.34. Over the past year, BMA's P/B has been as high as 3.58 and as low as 0.98, with a median of 1.67.

Value investors also use the P/S ratio. The P/S ratio is is calculated as price divided by 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. BMA has a P/S ratio of 0.59. This compares to its industry's average P/S of 1.74.

These figures are just a handful of the metrics value investors tend to look at, but they help show that Banco Macro is likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, BMA feels like a great value stock at the moment.


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