Should Value Investors Buy Essa Bancorp (ESSA) Stock?
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.
Considering these trends, value investing is clearly one of the most preferred ways to find strong stocks in any type of market. Value investors use tried-and-true metrics and fundamental analysis to find companies that they believe are undervalued at their current share price levels.
On top of the Zacks Rank, investors can also look at our innovative Style Scores system to find stocks with specific traits. For example, value investors will want to focus on the "Value" category. Stocks with high Zacks Ranks and "A" grades for Value will be some of the highest-quality value stocks on the market today.
One company value investors might notice is Essa Bancorp (ESSA). ESSA 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 10.97, which compares to its industry's average of 11.97. ESSA's Forward P/E has been as high as 15.20 and as low as 8.53, with a median of 11.29, all within the past year.
Investors should also recognize that ESSA has a P/B ratio of 0.74. 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. ESSA's current P/B looks attractive when compared to its industry's average P/B of 1. Over the past 12 months, ESSA's P/B has been as high as 1.06 and as low as 0.62, with a median of 0.98.
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. ESSA has a P/S ratio of 1.89. This compares to its industry's average P/S of 1.9.
Finally, investors will want to recognize that ESSA has a P/CF ratio of 7.88. 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. ESSA's current P/CF looks attractive when compared to its industry's average P/CF of 10.48. Within the past 12 months, ESSA's P/CF has been as high as 11.69 and as low as 6.72, with a median of 10.62.
These are only a few of the key metrics included in Essa Bancorp'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, ESSA looks like an impressive value stock at the moment.
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