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Should Value Investors Buy Provident Financial (PROV) Stock?

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·2 min read
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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.

Considering these trends, value investing is clearly one of the most preferred ways to find strong stocks in any type of market. Value investors use a variety of methods, including tried-and-true valuation metrics, to find these stocks.

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.

Provident Financial (PROV) is a stock many investors are watching right now. PROV is currently sporting a Zacks Rank of #2 (Buy) and an A for Value.

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 popular metric because sales are harder to manipulate on an income statement, so they are often considered a better performance indicator. PROV has a P/S ratio of 1.89. This compares to its industry's average P/S of 1.92.

Finally, we should also recognize that PROV has a P/CF ratio of 8.14. 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. PROV's current P/CF looks attractive when compared to its industry's average P/CF of 8.23. PROV's P/CF has been as high as 21.53 and as low as 7.85, with a median of 18.86, all within the past year.

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


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