Should Value Investors Buy First United (FUNC) 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 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.
First United (FUNC) is a stock many investors are watching right now. FUNC is currently sporting a Zacks Rank of #2 (Buy) and an A for Value. The stock has a Forward P/E ratio of 6.95. This compares to its industry's average Forward P/E of 12.54. Over the past 52 weeks, FUNC's Forward P/E has been as high as 8.41 and as low as 6, with a median of 7.16.
Investors should also recognize that FUNC has a P/B ratio of 1.14. 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. FUNC's current P/B looks attractive when compared to its industry's average P/B of 1.89. Over the past 12 months, FUNC's P/B has been as high as 1.18 and as low as 0.82, with a median of 0.95.
Value investors also use the P/S ratio. The P/S ratio is is calculated as price divided by sales. This is a prefered metric because revenue can't really be manipulated, so sales are often a truer performance indicator. FUNC has a P/S ratio of 1.99. This compares to its industry's average P/S of 2.96.
Finally, investors will want to recognize that FUNC has a P/CF ratio of 7.47. 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 stock's P/CF looks attractive against its industry's average P/CF of 15.35. Over the past 52 weeks, FUNC's P/CF has been as high as 8.94 and as low as 5.80, with a median of 7.10.
Value investors will likely look at more than just these metrics, but the above data helps show that First United is likely undervalued currently. And when considering the strength of its earnings outlook, FUNC sticks out at as one of the market's strongest value stocks.
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