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Are Investors Undervaluing Hallmark Financial (HALL) Right Now?

Zacks Equity Research
The Joint Corp. (JYNT) closed the most recent trading day at $15.94, moving -1.48% from the previous trading session.

Here at Zacks, our focus is on the proven Zacks Rank system, which emphasizes earnings estimates and estimate revisions to find great stocks. Nevertheless, we are always paying attention to the latest value, growth, and momentum trends to underscore strong picks.

Considering these trends, value investing is clearly one of the most preferred ways to find strong stocks in any type of market. 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.

One company value investors might notice is Hallmark Financial (HALL). HALL is currently sporting a Zacks Rank of #1 (Strong Buy), as well as an A grade for Value. The stock is trading with a P/E ratio of 9.22, which compares to its industry's average of 24.11. Over the past 52 weeks, HALL's Forward P/E has been as high as 13.38 and as low as 9.20, with a median of 11.41.

Another valuation metric that we should highlight is HALL's P/B ratio of 0.70. 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. HALL's current P/B looks attractive when compared to its industry's average P/B of 1.46. Over the past 12 months, HALL's P/B has been as high as 0.79 and as low as 0.63, with a median of 0.73.

Value investors also love the P/S ratio, which is calculated by simply dividing a stock's price with the company's sales. This is a prefered metric because revenue can't really be manipulated, so sales are often a truer performance indicator. HALL has a P/S ratio of 0.49. This compares to its industry's average P/S of 1.17.

Finally, our model also underscores that HALL has a P/CF ratio of 12.27. 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. This stock's P/CF looks attractive against its industry's average P/CF of 32.87. HALL's P/CF has been as high as 21.29 and as low as -134.13, with a median of -15.69, all within the past year.

These figures are just a handful of the metrics value investors tend to look at, but they help show that Hallmark Financial is likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, HALL feels like a great value stock at the moment.


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