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Are Investors Undervaluing Financial Institutions (FISI) Right Now?

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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.

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 fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.

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.

One company to watch right now is Financial Institutions (FISI). FISI is currently sporting a Zacks Rank of #2 (Buy), as well as a Value grade of A. The stock is trading with a P/E ratio of 9.46, which compares to its industry's average of 12.85. Over the past 52 weeks, FISI's Forward P/E has been as high as 10.79 and as low as 8.18, with a median of 9.17.

Investors should also recognize that FISI has a P/B ratio of 1.06. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. FISI's current P/B looks attractive when compared to its industry's average P/B of 1.72. Over the past 12 months, FISI's P/B has been as high as 1.16 and as low as 0.80, with a median of 1.05.

Value investors also use the P/S ratio. The P/S ratio is is calculated as price divided by sales. This is a popular metric because sales are harder to manipulate on an income statement, so they are often considered a better performance indicator. FISI has a P/S ratio of 2.41. This compares to its industry's average P/S of 3.

Finally, investors should note that FISI has a P/CF ratio of 6. 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. This company's current P/CF looks solid when compared to its industry's average P/CF of 17.44. Over the past 52 weeks, FISI's P/CF has been as high as 10.58 and as low as 5.64, with a median of 6.78.

These are only a few of the key metrics included in Financial Institutions'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, FISI looks like an impressive value stock at the moment.


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