Are Investors Undervaluing FS Bancorp (FSBW) 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 a variety of methods, including tried-and-true valuation metrics, to find these stocks.
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.
FS Bancorp (FSBW) is a stock many investors are watching right now. FSBW is currently holding a Zacks Rank of #2 (Buy) and a Value grade of A. The stock is trading with P/E ratio of 9.06 right now. For comparison, its industry sports an average P/E of 14.11. Over the past 52 weeks, FSBW's Forward P/E has been as high as 11.03 and as low as 8.13, with a median of 9.96.
We should also highlight that FSBW has a P/B ratio of 1.04. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. This stock's P/B looks attractive against its industry's average P/B of 1.92. FSBW's P/B has been as high as 1.27 and as low as 1.01, with a median of 1.18, 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. FSBW has a P/S ratio of 1.91. This compares to its industry's average P/S of 3.39.
Finally, we should also recognize that FSBW has a P/CF ratio of 5. 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 12.85. Over the past 52 weeks, FSBW's P/CF has been as high as 5.69 and as low as 4.43, with a median of 5.02.
These figures are just a handful of the metrics value investors tend to look at, but they help show that FS Bancorp is likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, FSBW feels like a great value stock at the moment.
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