While the proven Zacks Rank places an emphasis on earnings estimates and estimate revisions to find strong stocks, we also know that investors tend to develop their own individual strategies. With this in mind, we are always looking at value, growth, and momentum trends to discover great companies.
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 use a variety of methods, including tried-and-true valuation metrics, to find these stocks.
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 company value investors might notice is Old Second Bancorp (OSBC). OSBC is currently sporting a Zacks Rank of #2 (Buy), as well as an A grade for Value. The stock holds a P/E ratio of 6.92, while its industry has an average P/E of 9.90. Over the past year, OSBC's Forward P/E has been as high as 10.44 and as low as 5.42, with a median of 6.97.
Another valuation metric that we should highlight is OSBC's P/B ratio of 1.18. The P/B ratio is used to compare a stock's market value with 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 1.76. Over the past 12 months, OSBC's P/B has been as high as 1.81 and as low as 1.01, with a median of 1.24.
Finally, our model also underscores that OSBC has a P/CF ratio of 6.43. 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. OSBC's current P/CF looks attractive when compared to its industry's average P/CF of 9.70. OSBC's P/CF has been as high as 18.17 and as low as 6.06, with a median of 7.30, 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 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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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
