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Are Investors Undervaluing Independent Bank (IBCP) Right Now?

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  • IBCP

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.

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 a variety of methods, including tried-and-true valuation metrics, to find these stocks.

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 Independent Bank (IBCP). IBCP is currently holding a Zacks Rank of #2 (Buy) and a Value grade of A. The stock is trading with P/E ratio of 9.31 right now. For comparison, its industry sports an average P/E of 12.63. Over the last 12 months, IBCP's Forward P/E has been as high as 11.83 and as low as 4.81, with a median of 10.36.

Investors should also note that IBCP holds a PEG ratio of 1.34. 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. IBCP's PEG compares to its industry's average PEG of 2.17. Over the last 12 months, IBCP's PEG has been as high as 1.38 and as low as 1.20, with a median of 1.26.

Another valuation metric that we should highlight is IBCP's P/B ratio of 1. 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 company's current P/B looks solid when compared to its industry's average P/B of 1.41. Over the past year, IBCP's P/B has been as high as 1.59 and as low as 0.62, with a median of 1.38.

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. IBCP has a P/S ratio of 1.63. This compares to its industry's average P/S of 1.93.

Finally, investors should note that IBCP has a P/CF ratio of 6.36. 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. IBCP's current P/CF looks attractive when compared to its industry's average P/CF of 13.36. Over the past year, IBCP's P/CF has been as high as 10.84 and as low as 4.18, with a median of 9.42.

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


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