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Is Orrstown Financial Services (ORRF) Stock Undervalued Right Now?

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·3 min read
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While the proven Zacks Rank places an emphasis on earnings estimates and estimate revisions to find strong stocks, we also know that investors tend to develop their own individual strategies. With this in mind, we are always looking at value, growth, and momentum trends to discover great companies.

Of these, perhaps no stock market trend is more popular than value investing, which is a strategy that has proven to be successful in all sorts of market environments. Value investors use a variety of methods, including tried-and-true valuation metrics, to find these stocks.

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 company value investors might notice is Orrstown Financial Services (ORRF). ORRF is currently sporting a Zacks Rank of #2 (Buy) and an A for Value. The stock is trading with a P/E ratio of 10.43, which compares to its industry's average of 13.25. ORRF's Forward P/E has been as high as 14.30 and as low as 6.95, with a median of 10.27, all within the past year.

Another notable valuation metric for ORRF is its P/B ratio of 1.11. 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 1.65. ORRF's P/B has been as high as 1.13 and as low as 0.62, with a median of 0.76, over the past year.

Value investors also use the P/S ratio. The P/S ratio is is calculated as price divided by sales. This is a prefered metric because revenue can't really be manipulated, so sales are often a truer performance indicator. ORRF has a P/S ratio of 2.12. This compares to its industry's average P/S of 2.78.

Finally, investors should note that ORRF has a P/CF ratio of 7.97. 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. ORRF's current P/CF looks attractive when compared to its industry's average P/CF of 14.72. Over the past year, ORRF's P/CF has been as high as 9.21 and as low as 6.01, with a median of 7.20.

These are just a handful of the figures considered in Orrstown Financial Services'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 ORRF is an impressive value stock right now.


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