Value investing is easily one of the most popular ways to find great stocks in any market environment. After all, who wouldn’t want to find stocks that are either flying under the radar and are compelling buys, or offer up tantalizing discounts when compared to fair value?
One way to find these companies is by looking at several key metrics and financial ratios, many of which are crucial in the value stock selection process. Let’s put Bank of Marin Bancorp BMRC stock into this equation and find out if it is a good choice for value-oriented investors right now, or if investors subscribing to this methodology should look elsewhere for top picks:
A key metric that value investors always look at is the Price to Earnings Ratio, or PE for short. This shows us how much investors are willing to pay for each dollar of earnings in a given stock, and is easily one of the most popular financial ratios in the world. The best use of the PE ratio is to compare the stock’s current PE ratio with: a) where this ratio has been in the past; b) how it compares to the average for the industry/sector; and c) how it compares to the market as a whole.
On this front, Bank of Marin Bancorp has a trailing twelve months PE ratio of 20.3, as you can see in the chart below:
This level actually compares somewhat favorably with the market at large, as the PE for the S&P 500 compares in at about 21.2. If we focus on the stock’s long-term PE trend, the current level puts Bank of Marin Bancorp’s current PE ratio above its midpoint over the past five years.
However, the stock’s PE also compares unfavorably with the industry’s trailing twelve months PE ratio, which stands at 19.8. At the very least, this indicates that the stock is relatively overvalued right now, compared to its peers.
We should also point out that Bank of Marin Bancorp has a forward PE ratio (price relative to this year’s earnings) of 21, so it is fair to say that a slightly more value-oriented path may be ahead for Bank of Marin Bancorp’s stock in the near term too.
While earnings are certainly important, it is essential to know how much you are paying for the growth of earnings as well. One can easily do that with the PEG ratio (ratio of the P/E to the expected future earnings growth rate).The PEG ratio gives a more complete picture of the valuation of a stock than the P/E ratio.
The company’s PEG ratio stands at just 1.9, compared with the industry average of 2. This suggests a slight undervalued trading relative to its earnings growth potential right now.
Broad Value Outlook
In aggregate, Bank of Marin Bancorp currently has a Value Style Score of B, putting it into the top 40% of all stocks we cover from this look. This makes BMRC a solid choice for value investors, and some of its other key metrics make this pretty clear too.
For example, the P/CF ratio (another great indicator of value) comes in at 14.7, which is slightly better than the industry average of 15.8. Clearly, BMRC is a solid choice on the value front from multiple angles.
What About the Stock Overall?
Though Bank of Marin Bancorp might be a good choice for value investors, there are plenty of other factors to consider before investing in this name. In particular, it is worth noting that the company has a Growth grade of F and a Momentum score of A. This gives BMRC a VGM score—or its overarching fundamental grade—of C. (You can read more about the Zacks Style Scores here >>)
Meanwhile, the current year consensus estimate has risen 0.3% in the past month, while the next year estimate has also increased 0.3%. You can see the consensus estimate trend and recent price action for the stock in the chart below:
Bank of Marin Bancorp Price and Consensus
Bank of Marin Bancorp Price and Consensus | Bank of Marin Bancorp Quote
The stock holds a Zacks Rank #3 (Hold), which indicates expectations of in-line performance from the company in the near term. However, Bank of Marin Bancorp is enjoying bullish analyst sentiment, as indicated by the positive estimate revisions, and this works in the company’s favor.
Bank of Marin Bancorp is an inspired choice for value investors, as it is hard to beat its incredible lineup of statistics on this front. Moreover, a decent industry rank (Top 43% out of more than 250 industries) further supports the growth potential of the stock. In fact, over the past three months, the industry has clearly outperformed the broader market, as you can see below:
So, it might pay for value investors to delve deeper into the company’s prospects, as fundamentals indicate that this stock could be a compelling pick.
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