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, value investing is easily one of the most popular ways to find great stocks in any market environment. Value investors use fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.
In addition to the Zacks Rank, investors looking for stocks with specific traits can utilize our Style Scores system. Of course, value investors will be most interested in the system's "Value" category. Stocks with "A" grades for Value and high Zacks Ranks are among the best value stocks available at any given moment.
One company to watch right now is Merchants Bancorp (MBIN). MBIN is currently sporting a Zacks Rank of #2 (Buy) and an A for Value. The stock is trading with P/E ratio of 7.75 right now. For comparison, its industry sports an average P/E of 11.97. Over the past 52 weeks, MBIN's Forward P/E has been as high as 10.71 and as low as 6.06, with a median of 8.29.
Investors should also recognize that MBIN has a P/B ratio of 1. 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. MBIN's current P/B looks attractive when compared to its industry's average P/B of 1.47. Over the past 12 months, MBIN's P/B has been as high as 1.83 and as low as 0.85, with a median of 1.22.
Value investors also use the P/S ratio. The P/S ratio is is calculated as price divided by sales. Some people prefer this metric because sales are harder to manipulate on an income statement. This means it could be a truer performance indicator. MBIN has a P/S ratio of 1.51. This compares to its industry's average P/S of 1.84.
Finally, we should also recognize that MBIN has a P/CF ratio of 4.79. 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 company's current P/CF looks solid when compared to its industry's average P/CF of 12.86. Over the past year, MBIN's P/CF has been as high as 12.10 and as low as 4.06, with a median of 7.90.
Value investors will likely look at more than just these metrics, but the above data helps show that Merchants Bancorp is likely undervalued currently. And when considering the strength of its earnings outlook, MBIN sticks out at as one of the market's strongest value stocks.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Merchants Bancorp (MBIN) : Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment Research