Should Value Investors Buy Customers Bancorp (CUBI) Stock?
Here at Zacks, we focus on our proven ranking system, which places an emphasis on earnings estimates and estimate revisions, to find winning stocks. But we also understand that investors develop their own strategies, so we are constantly looking at the latest trends in value, growth, and momentum to find strong companies for our readers.
Of these, value investing is easily one of the most popular ways to find great stocks in any market environment. Value investors use tried-and-true metrics and fundamental analysis to find companies that they believe are undervalued at their current share price levels.
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 company value investors might notice is Customers Bancorp (CUBI). CUBI is currently sporting a Zacks Rank of #1 (Strong Buy) and an A for Value. The stock is trading with P/E ratio of 6.01 right now. For comparison, its industry sports an average P/E of 11.88. CUBI's Forward P/E has been as high as 7.10 and as low as 3.57, with a median of 5.61, all within the past year.
We should also highlight that CUBI has a P/B ratio of 1.35. 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 1.78. CUBI's P/B has been as high as 1.44 and as low as 0.42, with a median of 1.06, over the past year.
Value investors also frequently use the P/S ratio. This metric is found by dividing a stock's price with the company's revenue. 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 1.96. This compares to its industry's average P/S of 3.01.
Finally, investors will want to recognize that CUBI has a P/CF ratio of 6.24. 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. CUBI's P/CF compares to its industry's average P/CF of 15.52. Over the past 52 weeks, CUBI's P/CF has been as high as 7.30 and as low as 2.69, with a median of 5.40.
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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