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Are Investors Undervaluing Citizens Financial Group (CFG) Right Now?

Zacks Equity Research
Fvcbankcorp, Inc. (FVCB) delivered earnings and revenue surprises of -6.67% and -1.83%, respectively, for the quarter ended June 2019. Do the numbers hold clues to what lies ahead for the stock?

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 rely on traditional forms of analysis on key valuation metrics to find stocks that they believe are undervalued, leaving room for profits.

On top of the Zacks Rank, investors can also look at our innovative Style Scores system to find stocks with specific traits. For example, value investors will want to focus on the "Value" category. Stocks with high Zacks Ranks and "A" grades for Value will be some of the highest-quality value stocks on the market today.

One stock to keep an eye on is Citizens Financial Group (CFG). CFG is currently sporting a Zacks Rank of #2 (Buy), as well as a Value grade of A. The stock is trading with P/E ratio of 9.24 right now. For comparison, its industry sports an average P/E of 11.82. CFG's Forward P/E has been as high as 13.07 and as low as 7.26, with a median of 10.73, all within the past year.

Investors should also note that CFG holds a PEG ratio of 0.55. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. CFG's industry currently sports an average PEG of 1.20. CFG's PEG has been as high as 0.73 and as low as 0.46, with a median of 0.55, all within the past year.

Investors should also recognize that CFG has a P/B ratio of 0.85. 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. CFG's current P/B looks attractive when compared to its industry's average P/B of 1.01. Over the past year, CFG's P/B has been as high as 1.10 and as low as 0.67, with a median of 0.96.

Value investors also use the P/S ratio. The P/S ratio is is calculated as price divided by sales. This is a prefered metric because revenue can't really be manipulated, so sales are often a truer performance indicator. CFG has a P/S ratio of 2.24. This compares to its industry's average P/S of 3.14.

Finally, investors should note that CFG has a P/CF ratio of 7.78. 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. This company's current P/CF looks solid when compared to its industry's average P/CF of 10.38. Within the past 12 months, CFG's P/CF has been as high as 10.38 and as low as 5.57, with a median of 8.41.

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


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