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.
Looking at the history of these trends, perhaps none is more beloved than value investing. This strategy simply looks to identify companies that are being undervalued by the broader market. Value investors rely on traditional forms of analysis on key valuation metrics to find stocks that they believe are undervalued, leaving room for profits.
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.
One stock to keep an eye on is Wintrust Financial (WTFC). WTFC is currently holding a Zacks Rank of #2 (Buy) and a Value grade of A. The stock is trading with P/E ratio of 8.72 right now. For comparison, its industry sports an average P/E of 9.30. Over the past year, WTFC's Forward P/E has been as high as 17.11 and as low as 8.72, with a median of 13.04.
Investors should also note that WTFC holds a PEG ratio of 0.53. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. WTFC's PEG compares to its industry's average PEG of 1.16. WTFC's PEG has been as high as 1.01 and as low as 0.53, with a median of 0.65, all within the past year.
We should also highlight that WTFC has a P/B ratio of 1.13. 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 stock's P/B looks attractive against its industry's average P/B of 1.99. WTFC's P/B has been as high as 1.47 and as low as 1.07, with a median of 1.25, over the past year.
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. WTFC has a P/S ratio of 2.65. This compares to its industry's average P/S of 2.75.
Finally, investors should note that WTFC has a P/CF ratio of 8.96. 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. WTFC's P/CF compares to its industry's average P/CF of 15.34. WTFC's P/CF has been as high as 10.61 and as low as 7.83, with a median of 9.33, all within the past year.
These figures are just a handful of the metrics value investors tend to look at, but they help show that Wintrust Financial is likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, WTFC feels like a great value stock at the moment.
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