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 tried-and-true metrics and fundamental analysis to find companies that they believe are undervalued at their current share price levels.
On top of the Zacks Rank, investors can also look at our innovative Style Scores system to find stocks with specific traits. For example, value investors will want to focus on the "Value" category. Stocks with high Zacks Ranks and "A" grades for Value will be some of the highest-quality value stocks on the market today.
One stock to keep an eye on is Old Second Bancorp (OSBC). OSBC is currently holding a Zacks Rank of #2 (Buy) and a Value grade of A. The stock is trading with P/E ratio of 10.63 right now. For comparison, its industry sports an average P/E of 12.40. Over the past year, OSBC's Forward P/E has been as high as 15.31 and as low as 5.69, with a median of 10.62.
OSBC is also sporting a PEG ratio of 1.45. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. OSBC's industry currently sports an average PEG of 2.13. Within the past year, OSBC's PEG has been as high as 1.48 and as low as 1.45, with a median of 1.47.
Investors should also recognize that OSBC has a P/B ratio of 0.87. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. This company's current P/B looks solid when compared to its industry's average P/B of 1.41. OSBC's P/B has been as high as 1.50 and as low as 0.67, with a median of 0.92, 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. OSBC has a P/S ratio of 1.65. This compares to its industry's average P/S of 1.79.
Finally, we should also recognize that OSBC has a P/CF ratio of 6.90. This metric focuses on a firm's operating cash flow and is often used to find stocks that are undervalued based on the strength of their cash outlook. This company's current P/CF looks solid when compared to its industry's average P/CF of 13.36. Over the past 52 weeks, OSBC's P/CF has been as high as 9.65 and as low as 4.27, with a median of 7.16.
These figures are just a handful of the metrics value investors tend to look at, but they help show that Old Second Bancorp is likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, OSBC feels like a great value stock at the moment.
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