Are Investors Undervaluing Financial Institutions (FISI) Right Now?
Here at Zacks, we focus on our proven ranking system, which places an emphasis on earnings estimates and estimate revisions, to find winning stocks. But we also understand that investors develop their own strategies, so we are constantly looking at the latest trends in value, growth, and momentum to find strong companies for our readers.
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.
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 company to watch right now is Financial Institutions (FISI). FISI 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 5.24. This compares to its industry's average Forward P/E of 7.74. FISI's Forward P/E has been as high as 7.57 and as low as 4.90, with a median of 6.44, all within the past year.
We should also highlight that FISI has a P/B ratio of 0.64. 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. This stock's P/B looks solid versus its industry's average P/B of 1.09. FISI's P/B has been as high as 1.08 and as low as 0.57, with a median of 0.78, 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. FISI has a P/S ratio of 0.9. This compares to its industry's average P/S of 1.7.
Finally, our model also underscores that FISI has a P/CF ratio of 4.04. This metric focuses on a firm's operating cash flow and is often used to find stocks that are undervalued based on the strength of their cash outlook. FISI's P/CF compares to its industry's average P/CF of 9.32. Over the past year, FISI's P/CF has been as high as 5.68 and as low as 3.51, with a median of 4.60.
If you're looking for another solid Banks - Northeast value stock, take a look at Orrstown Financial Services (ORRF). ORRF is a # 2 (Buy) stock with a Value score of A.
Orrstown Financial Services also has a P/B ratio of 0.94 compared to its industry's price-to-book ratio of 1.09. Over the past year, its P/B ratio has been as high as 1.36, as low as 0.70, with a median of 1.02.
These are only a few of the key metrics included in Financial Institutions and Orrstown Financial Services strong Value grade, but they help show that the stocks are likely undervalued right now. When factoring in the strength of its earnings outlook, FISI and ORRF look like an impressive value stock at the moment.
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Financial Institutions, Inc. (FISI) : Free Stock Analysis Report
Orrstown Financial Services Inc (ORRF) : Free Stock Analysis Report
