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Should Value Investors Buy Customers Bancorp (CUBI) Stock?

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·3 min read
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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.

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.

On top of the Zacks Rank, investors can also look at our innovative Style Scores system to find stocks with specific traits. For example, value investors will want to focus on the "Value" category. Stocks with high Zacks Ranks and "A" grades for Value will be some of the highest-quality value stocks on the market today.

One stock to keep an eye on is Customers Bancorp (CUBI). CUBI is currently holding a Zacks Rank of #1 (Strong Buy) and a Value grade of A. The stock is trading with P/E ratio of 5.74 right now. For comparison, its industry sports an average P/E of 11.68. CUBI's Forward P/E has been as high as 7.10 and as low as 3.57, with a median of 4.99, all within the past year.

Investors should also recognize that CUBI has a P/B ratio of 1.30. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. CUBI's current P/B looks attractive when compared to its industry's average P/B of 1.75. Over the past year, CUBI's P/B has been as high as 1.44 and as low as 0.41, with a median of 0.71.

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. CUBI has a P/S ratio of 1.86. This compares to its industry's average P/S of 2.88.

Finally, we should also recognize that CUBI has a P/CF ratio of 6.59. 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. CUBI's P/CF compares to its industry's average P/CF of 14.91. Over the past year, CUBI's P/CF has been as high as 7.30 and as low as 2.69, with a median of 4.32.

Value investors will likely look at more than just these metrics, but the above data helps show that Customers Bancorp is likely undervalued currently. And when considering the strength of its earnings outlook, CUBI sticks out at as one of the market's strongest value stocks.

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