Should Value Investors Buy Merchants Bancorp (MBIN) 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.
In addition to the Zacks Rank, investors looking for stocks with specific traits can utilize our Style Scores system. Of course, value investors will be most interested in the system's "Value" category. Stocks with "A" grades for Value and high Zacks Ranks are among the best value stocks available at any given moment.
One company value investors might notice is Merchants Bancorp (MBIN). MBIN is currently sporting a Zacks Rank of #2 (Buy), as well as an A grade for Value. The stock holds a P/E ratio of 5.86, while its industry has an average P/E of 8.82. Over the last 12 months, MBIN's Forward P/E has been as high as 8.72 and as low as 5.52, with a median of 6.69.
We should also highlight that MBIN has a P/B ratio of 1.22. The P/B ratio is used to compare a stock's market value with its book value, which is defined as total assets minus total liabilities. This stock's P/B looks solid versus its industry's average P/B of 1.60. MBIN's P/B has been as high as 1.89 and as low as 1.17, with a median of 1.56, over the past year.
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. MBIN has a P/S ratio of 2.16. This compares to its industry's average P/S of 2.66.
Finally, our model also underscores that MBIN has a P/CF ratio of 4.66. 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. MBIN's current P/CF looks attractive when compared to its industry's average P/CF of 12.94. Over the past year, MBIN's P/CF has been as high as 6.06 and as low as 3.42, with a median of 4.68.
These are just a handful of the figures considered in Merchants Bancorp'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 MBIN is an impressive value stock right now.
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