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, Great Southern Bancorp, Inc. GSBC 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, Great Southern Bancorp has a trailing twelve months PE ratio of 12.05, as you can see in the chart below:
This level actually compares pretty favorably with the market at large, as the PE for the S&P 500 compares in at about 19.19. If we focus on the stock’s long-term PE trend, the current level Great Southern Bancorp puts current PE ratio slightly below its midpoint (which is 12.79) over the past five years.
Further, the stock’s PE compares favorably with the Zacks Finance sector’s trailing twelve months PE ratio, which stands at 13.63. At the very least, this indicates that the stock is relatively undervalued right now, compared to its peers.
We should also point out that Great Southern Bancorp has a forward PE ratio (price relative to this year’s earnings) of 12.03, so it is fair to say that a slightly more value-oriented path may be ahead for Great Southern Bancorp’s stock in the near term too.
Another key metric to note is the Price/Sales ratio. This approach compares a given stock’s price to its total sales, where a lower reading is generally considered better. Some people like this metric more than other value-focused ones because it looks at sales, something that is far harder to manipulate with accounting tricks than earnings.
Right now, Great Southern Bancorp has a P/S ratio of about 3.32. This is marginally lower than the S&P 500 average, which comes in at 3.34 right now. Also, as we can see in the chart below, this is well below the highs for this stock in particular over the past few years.
If anything, this suggests some level of undervalued trading—at least compared to historical norms.
Broad Value Outlook
In aggregate, Great Southern 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 GSBC a solid choice for value investors and some of its other metrics make it clear too.
For example, its P/CF ratio (another great indicator of value) comes in at 11.52, which is somewhat better than the industry average of 12.72. Clearly, GSBC is a solid choice on the value front from multiple angles.
What About the Stock Overall?
Though Great Southern 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 D and a Momentum score of C. This gives GSBC a VGM score—or its overarching fundamental grade—of C.(You can read more about the Zacks Style Scores here >>).
Meanwhile, the company’s recent earnings estimates have been encouraging. The current quarter has seen one estimate go higher in the past sixty days compared to one lower, while current year estimate has seen one upward and no downward revision in the same time period.
This has had a noticeable impact on the consensus estimate, as the current quarter consensus estimate has increased 7.8% in the past two months, while the current year estimate has climbed 5.6%. in the same time period. You can see the consensus estimate trend and recent price action for the stock in the chart below:
Great Southern Bancorp, Inc. Price and Consensus
Great Southern Bancorp, Inc. price-consensus-chart | Great Southern Bancorp, Inc. Quote
Despite having a bullish trend, GSBC carries a Zacks Rank #3 (Hold). This indicates that analysts have some apprehensions about the stock in the immediate future. Thus, we are looking for in-line performance from the company in the near term.
Great Southern Bancorp is an inspired choice for value investors, as it is hard to beat its incredible lineup of statistics on this front. Moreover, a strong industry rank (top 22% out of more than 250 industries) further supports the growth potential of the stock. However, with a Zacks Rank #3, it is hard to get too excited about this company overall. In fact, over the past one year, the sector has clearly underperformed the broader market, as you can see below:
So, despite a Zacks Rank #3, we believe that bullish analyst sentiment and favorable industry factors make this value stock a compelling pick.
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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.