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Should Value Investors Buy First Horizon National (FHN) Stock?

Zacks Equity Research
·3 min read

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.

Looking at the history of these trends, perhaps none is more beloved than value investing. This strategy simply looks to identify companies that are being undervalued by the broader market. Value investors use fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.

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 to watch right now is First Horizon National (FHN). FHN is currently sporting a Zacks Rank of #2 (Buy), as well as an A grade for Value. The stock is trading with P/E ratio of 8.28 right now. For comparison, its industry sports an average P/E of 13.02. Over the last 12 months, FHN's Forward P/E has been as high as 10.81 and as low as 7.95, with a median of 9.85.

Investors will also notice that FHN has a PEG ratio of 1.02. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. FHN's industry has an average PEG of 1.43 right now. FHN's PEG has been as high as 2.14 and as low as 0.98, with a median of 1.50, all within the past year.

We should also highlight that FHN has a P/B ratio of 0.87. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. FHN's current P/B looks attractive when compared to its industry's average P/B of 1.65. Within the past 52 weeks, FHN's P/B has been as high as 1.10 and as low as 0.83, with a median of 1.01.

Value investors also frequently use the P/S ratio. This metric is found by dividing a stock's price with the company's revenue. This is a prefered metric because revenue can't really be manipulated, so sales are often a truer performance indicator. FHN has a P/S ratio of 1.8. This compares to its industry's average P/S of 2.54.

Finally, investors will want to recognize that FHN has a P/CF ratio of 8.57. 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. FHN's current P/CF looks attractive when compared to its industry's average P/CF of 13.42. Over the past 52 weeks, FHN's P/CF has been as high as 11.12 and as low as 6.97, with a median of 7.99.

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


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Zacks Investment Research