Here at Zacks, our focus is on the proven Zacks Rank system, which emphasizes earnings estimates and estimate revisions to find great stocks. Nevertheless, we are always paying attention to the latest value, growth, and momentum trends to underscore strong picks.
Of these, value investing is easily one of the most popular ways to find great stocks in any market environment. 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 Two River Bancorp (TRCB). TRCB is currently holding a Zacks Rank of #2 (Buy) and a Value grade of A. The stock has a Forward P/E ratio of 10.42. This compares to its industry's average Forward P/E of 10.57. Over the last 12 months, TRCB's Forward P/E has been as high as 14.43 and as low as 9.17, with a median of 12.01.
Another valuation metric that we should highlight is TRCB's P/B ratio of 1.06. 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 stock's P/B looks solid versus its industry's average P/B of 1.47. Over the past 12 months, TRCB's P/B has been as high as 1.55 and as low as 0.92, with a median of 1.19.
Value investors also use the P/S ratio. The P/S ratio is is calculated as price divided by sales. This is a popular metric because sales are harder to manipulate on an income statement, so they are often considered a better performance indicator. TRCB has a P/S ratio of 2.45. This compares to its industry's average P/S of 2.8.
Finally, investors should note that TRCB has a P/CF ratio of 9.93. This data point considers a firm's operating cash flow and is frequently used to find companies that are undervalued when considering their solid cash outlook. This company's current P/CF looks solid when compared to its industry's average P/CF of 12.15. Over the past 52 weeks, TRCB's P/CF has been as high as 19.20 and as low as 9.82, with a median of 13.08.
Value investors will likely look at more than just these metrics, but the above data helps show that Two River Bancorp is likely undervalued currently. And when considering the strength of its earnings outlook, TRCB sticks out at as one of the market's strongest value stocks.
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