Are Investors Undervaluing South Plains Financial (SPFI) Right Now?
The proven Zacks Rank system focuses on earnings estimates and estimate revisions to find winning stocks. Nevertheless, we know that our readers all have their own perspectives, so we are always looking at the latest trends in value, growth, and momentum to find strong picks.
Looking at the history of these trends, perhaps none is more beloved than value investing. This strategy simply looks to identify companies that are being undervalued by the broader 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 South Plains Financial (SPFI). SPFI is currently holding a Zacks Rank of #2 (Buy) and a Value grade of A. The stock is trading with P/E ratio of 9.46 right now. For comparison, its industry sports an average P/E of 9.95. Over the past year, SPFI's Forward P/E has been as high as 13.03 and as low as 8.92, with a median of 10.41.
Another valuation metric that we should highlight is SPFI's P/B ratio of 1.16. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. This stock's P/B looks solid versus its industry's average P/B of 1.88. Within the past 52 weeks, SPFI's P/B has been as high as 1.29 and as low as 1.02, with a median of 1.16.
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. SPFI has a P/S ratio of 1.88. This compares to its industry's average P/S of 3.1.
Finally, our model also underscores that SPFI has a P/CF ratio of 6.47. 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. SPFI's P/CF compares to its industry's average P/CF of 12.54. Within the past 12 months, SPFI's P/CF has been as high as 7.84 and as low as 5.68, with a median of 6.71.
These are just a handful of the figures considered in South Plains Financial's great Value grade. Still, they help show that the stock is likely being undervalued at the moment. Add this to the strength of its earnings outlook, and we can clearly see that SPFI is an impressive value stock right now.
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