Are Investors Undervaluing FS Bancorp (FSBW) Right Now?
While the proven Zacks Rank places an emphasis on earnings estimates and estimate revisions to find strong stocks, we also know that investors tend to develop their own individual strategies. With this in mind, we are always looking at value, growth, and momentum trends to discover great companies.
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 fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.
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 company value investors might notice is FS Bancorp (FSBW). FSBW is currently sporting a Zacks Rank of #2 (Buy), as well as an A grade for Value. The stock is trading with a P/E ratio of 7.54, which compares to its industry's average of 10.02. FSBW's Forward P/E has been as high as 11.01 and as low as 7.52, with a median of 8.89, all within the past year.
Another valuation metric that we should highlight is FSBW's P/B ratio of 1.02. 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 company's current P/B looks solid when compared to its industry's average P/B of 1.67. FSBW's P/B has been as high as 1.26 and as low as 0.97, with a median of 1.07, over the past year.
Value investors also frequently use the P/S ratio. This metric is found by dividing a stock's price with the company's revenue. This is a prefered metric because revenue can't really be manipulated, so sales are often a truer performance indicator. FSBW has a P/S ratio of 1.71. This compares to its industry's average P/S of 2.93.
Finally, we should also recognize that FSBW has a P/CF ratio of 5.06. 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. This stock's P/CF looks attractive against its industry's average P/CF of 10.39. Within the past 12 months, FSBW's P/CF has been as high as 5.62 and as low as 4.77, with a median of 5.21.
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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