Are Investors Undervaluing Chemung Financial (CHMG) Right Now?
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, perhaps no stock market trend is more popular than value investing, which is a strategy that has proven to be successful in all sorts of market environments. Value investors use tried-and-true metrics and fundamental analysis to find companies that they believe are undervalued at their current share price levels.
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.
Chemung Financial (CHMG) is a stock many investors are watching right now. CHMG is currently sporting a Zacks Rank of #1 (Strong Buy), as well as a Value grade of A. The stock has a Forward P/E ratio of 9.89. This compares to its industry's average Forward P/E of 10.30. Over the past year, CHMG's Forward P/E has been as high as 13.17 and as low as 6.77, with a median of 10.63.
Another notable valuation metric for CHMG is its P/B ratio of 0.83. 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. CHMG's current P/B looks attractive when compared to its industry's average P/B of 0.91. CHMG's P/B has been as high as 1.19 and as low as 0.61, with a median of 0.76, 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 popular metric because sales are harder to manipulate on an income statement, so they are often considered a better performance indicator. CHMG has a P/S ratio of 1.83. This compares to its industry's average P/S of 2.19.
Finally, investors should note that CHMG has a P/CF ratio of 6.92. 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. CHMG's current P/CF looks attractive when compared to its industry's average P/CF of 11. Over the past 52 weeks, CHMG's P/CF has been as high as 9.83 and as low as 5.38, with a median of 7.14.
These figures are just a handful of the metrics value investors tend to look at, but they help show that Chemung Financial is likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, CHMG feels like a great value stock at the moment.
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