Value investing is easily one of the most popular ways to find great stocks in any market environment. After all, who wouldn’t want to find stocks that are either flying under the radar and are compelling buys, or offer up tantalizing discounts when compared to fair value?
One way to find these companies is by looking at several key metrics and financial ratios, many of which are crucial in the value stock selection process. Let’s put KB Financial Group Inc. KB stock into this equation and find out if it is a good choice for value-oriented investors right now, or if investors subscribing to this methodology should look elsewhere for top picks:
A key metric that value investors always look at is the Price to Earnings Ratio, or PE for short. This shows us how much investors are willing to pay for each dollar of earnings in a given stock, and is easily one of the most popular financial ratios in the world. The best use of the PE ratio is to compare the stock’s current PE ratio with: a) where this ratio has been in the past; b) how it compares to the average for the industry/sector; and c) how it compares to the market as a whole.
On this front, KB Financial has a trailing twelve months PE ratio of 9.2, as you can see in the chart below:
This level actually compares pretty favorably with the market at large, as the PE for the S&P 500 stands at about 20.1. If we focus on the long-term PE trend, KB Financial’s current PE level puts it above its midpoint over the past five years, with the number having risen rapidly over the past few months.
Further, the stock’s PE also compares favorably with the Zacks Categorized Banks - Foreign industry’s trailing twelve months PE ratio, which stands at 16.0. At the very least, this indicates that the stock is relatively undervalued right now, compared to its peers.
We should also point out that KB Financial has a forward PE ratio (price relative to this year’s earnings) of just 9.35, so it is fair to say that a slightly more value-oriented path may be ahead for KB Financial stock in the near term too.
Another key metric to note is the Price/Sales ratio. This approach compares a given stock’s price to its total sales, where a lower reading is generally considered better. Some people like this metric more than other value-focused ones because it looks at sales, something that is far harder to manipulate with accounting tricks than earnings.
Right now, KB Financial has a P/S ratio of about 1.6. This is a bit lower than the S&P 500 average, which comes in at 2.84 right now. Also, as we can see in the chart below, this is in consistent with the highs for this stock in particular over the past few years.
If anything, KB is in the lower end of its range in the time period from a P/S metric, suggesting some level of undervalued trading—at least compared to historical norms.
Broad Value Outlook
In aggregate, KB Financial currently has a Zacks Value Style Score of ‘B’, putting it into the top 40% of all stocks we cover from this look. This makes KB Financial a solid choice for value investors, and some of its other key metrics make this pretty clear too.
For example, the PEG ratio for KB Financial is just 1.11, a level that is fairly lower than the industry average of 2.08. The PEG ratio is a modified PE ratio that takes into account the stock’s earnings growth rate. Clearly, KB is a solid choice on the value front from multiple angles.
What About the Stock Overall?
Though KB Financial might be a good choice for value investors, there are plenty of other factors to consider before investing in this name. In particular, it is worth noting that the company has a Growth grade of ‘F’ and a Momentum score of ‘B’. This gives KB a Zacks VGM score—or its overarching fundamental grade—of ‘D’. (You can read more about the Zacks Style Scores here >>)
Meanwhile, the company’s recent earnings estimates have been mixed at best. The current quarter has seen seven estimates go higher in the past sixty days compared to two lower, while the full year estimate has seen eight up and eight down in the same time period.
This has had just a small impact on the consensus estimate though as the current quarter consensus estimate has risen by 2.5% in the past two months, while the full year estimate has inched lower by 0.1%. You can see the consensus estimate trend and recent price actionfor the stock in the chart below:
Meanwhile, the company’s recent estimate revision trend has been favorable. Both the current year and next year have seen one estimate going higher in the past thirty days compared to none lower. This has had just an impact on the consensus estimate though as the current year consensus estimate has increased 24.4% in the past one month, while the next year estimate has also gone up by 20.2%.
KB Financial Group Inc Price and Consensus
KB Financial Group Inc Price and Consensus | KB Financial Group Inc Quote
This positive trend is the reason why the stock has just a Zacks Rank #1 (Strong Buy) and why we are looking for in-line performance from the company in the near term.
KB Financial is an inspired choice for value investors, as it is hard to beat its incredible lineup of statistics on this front.
Boasting a good industry rank (top 26%) and a solid Zacks Rank, the company deserves attention right now. So, it might pay for value investors to delve deeper into the company’s prospects, as fundamentals indicate that this stock could be a compelling pick.
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