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Are Investors Undervaluing Banco Macro (BMA) Right Now?

Zacks Equity Research

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 fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.

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 stock to keep an eye on is Banco Macro (BMA). BMA is currently sporting a Zacks Rank of #1 (Strong Buy), as well as an A grade for Value. The stock has a Forward P/E ratio of 7.49. This compares to its industry's average Forward P/E of 9.61. Over the past year, BMA's Forward P/E has been as high as 7.88 and as low as 3.37, with a median of 5.67.

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 1.61. This compares to its industry's average P/S of 1.76.

Finally, we should also recognize that BMA has a P/CF ratio of 7.26. 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. BMA's current P/CF looks attractive when compared to its industry's average P/CF of 13.97. Within the past 12 months, BMA's P/CF has been as high as 8.48 and as low as 3.50, with a median of 4.99.

Value investors will likely look at more than just these metrics, but the above data helps show that Banco Macro is likely undervalued currently. And when considering the strength of its earnings outlook, BMA sticks out at as one of the market's strongest value stocks.


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