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Are Investors Undervaluing OFG Bancorp (OFG) Right Now?

Zacks Equity Research

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 rely on traditional forms of analysis on key valuation metrics to find stocks that they believe are undervalued, leaving room for profits.

Luckily, Zacks has developed its own Style Scores system in an effort to find stocks with specific traits. Value investors will be interested in the system's "Value" category. Stocks with both "A" grades in the Value category and high Zacks Ranks are among the strongest value stocks on the market right now.

One stock to keep an eye on is OFG Bancorp (OFG). OFG is currently sporting a Zacks Rank of #2 (Buy) and an A for Value. The stock has a Forward P/E ratio of 8.85. This compares to its industry's average Forward P/E of 10.73. Over the last 12 months, OFG's Forward P/E has been as high as 12.87 and as low as 8.11, with a median of 10.68.

Another notable valuation metric for OFG is its P/B ratio of 1.20. 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. This stock's P/B looks attractive against its industry's average P/B of 1.44. Over the past 12 months, OFG's P/B has been as high as 1.31 and as low as 0.83, with a median of 1.09.

Value investors also love the P/S ratio, which is calculated by simply dividing a stock's price with the company's 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. OFG has a P/S ratio of 2.48. This compares to its industry's average P/S of 2.85.

Finally, our model also underscores that OFG has a P/CF ratio of 10.01. This figure highlights a company's operating cash flow and can be used to find firms that are undervalued when considering their impressive cash outlook. This company's current P/CF looks solid when compared to its industry's average P/CF of 12.44. Over the past 52 weeks, OFG's P/CF has been as high as 11.16 and as low as 7.87, with a median of 9.31.

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


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