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Should Value Investors Buy First Business Financial Services (FBIZ) Stock?

Zacks Equity Research

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, 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 tried-and-true metrics and fundamental analysis to find companies that they believe are undervalued at their current share price levels.

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.

First Business Financial Services (FBIZ) is a stock many investors are watching right now. FBIZ is currently sporting a Zacks Rank of #2 (Buy) and an A for Value. The stock holds a P/E ratio of 10.32, while its industry has an average P/E of 10.76. FBIZ's Forward P/E has been as high as 12.92 and as low as 9.32, with a median of 10.38, all within the past year.

Another notable valuation metric for FBIZ is its P/B ratio of 1.11. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. FBIZ's current P/B looks attractive when compared to its industry's average P/B of 2.08. Over the past 12 months, FBIZ's P/B has been as high as 1.34 and as low as 0.94, with a median of 1.08.

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. FBIZ has a P/S ratio of 1.79. This compares to its industry's average P/S of 2.97.

Finally, we should also recognize that FBIZ has a P/CF ratio of 9.93. This metric takes into account a company's operating cash flow and can be used to find stocks that are undervalued based on their solid cash outlook. This company's current P/CF looks solid when compared to its industry's average P/CF of 11.74. Within the past 12 months, FBIZ's P/CF has been as high as 16.55 and as low as 8.76, with a median of 10.18.

These are just a handful of the figures considered in First Business 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 FBIZ is an impressive value stock right now.

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First Business Financial Services, Inc. (FBIZ) : Free Stock Analysis Report
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Zacks Investment Research