Are Investors Undervaluing First Horizon (FHN) Right Now?

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, perhaps no stock market trend is more popular than value investing, which is a strategy that has proven to be successful in all sorts of market environments. Value investors rely on traditional forms of analysis on key valuation metrics to find stocks that they believe are undervalued, leaving room for profits.

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.

First Horizon (FHN) is a stock many investors are watching right now. FHN is currently sporting a Zacks Rank of #2 (Buy), as well as an A grade for Value. The stock has a Forward P/E ratio of 10.29. This compares to its industry's average Forward P/E of 12.83. Over the past 52 weeks, FHN's Forward P/E has been as high as 10.69 and as low as 6.05, with a median of 9.47.

Another valuation metric that we should highlight is FHN's P/B ratio of 1.02. 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. FHN's current P/B looks attractive when compared to its industry's average P/B of 1.80. FHN's P/B has been as high as 1.03 and as low as 0.70, with a median of 0.85, 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. Some people prefer this metric because sales are harder to manipulate on an income statement. This means it could be a truer performance indicator. FHN has a P/S ratio of 1.71. This compares to its industry's average P/S of 1.74.

Finally, our model also underscores that FHN has a P/CF ratio of 9.51. 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. FHN's current P/CF looks attractive when compared to its industry's average P/CF of 13.92. Over the past 52 weeks, FHN's P/CF has been as high as 9.54 and as low as 5.03, with a median of 6.32.

These are only a few of the key metrics included in First Horizon's strong Value grade, but they help show that the stock is likely undervalued right now. When factoring in the strength of its earnings outlook, FHN looks like an impressive value stock at the moment.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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