Should value investors buy Wintrust Financial (WTFC) shares?

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 monitoring the latest trends in value, growth and momentum to find strong companies for our readers.

Looking at the history of these trends, perhaps none is more popular than value investing. This strategy simply aims to identify companies that are undervalued by the broader market. Value investors rely on traditional forms of analyzing key valuation metrics to find stocks that they believe are undervalued and have room for gains.

Zacks has developed the innovative Style Scores system to highlight stocks with specific characteristics. For example, value investors will be interested in stocks with excellent grades in the Value category. When combined with a high Zacks Rank, “A” grades in the Value category are among the strongest value stocks on the market today.

A stock to keep an eye on is Wintrust Financial (WTFC)WTFC currently has a Zacks Rank of #2 (Buy) and a Value grade of A. The stock is currently trading at a P/E ratio of 8.72. For comparison, the industry average is 9.30. Over the past year, WTFC’s Forward P/E ratios have ranged from 17.11 to 8.72, with a median of 13.04.

Investors should also note that WTFC ​​has a PEG ratio of 0.53. This metric is used similarly to the well-known P/E ratio, but the PEG ratio also takes into account the stock’s expected earnings growth rate. WTFC’s PEG is comparable to the industry average PEG of 1.16. WTFC’s PEG has been as high as 1.01 and 0.53 over the past year, with a median of 0.65.

We should also highlight that WTFC ​​has a P/B ratio of 1.13. Investors use the P/B ratio to compare a stock’s market value to its book value, which is defined as total assets minus total liabilities. This stock’s P/B looks attractive when compared to the industry average of 1.99. WTFC’s P/B has been as high as 1.47 and 1.07 over the past year, with a median of 1.25.

Value investors also often use the P/S ratio. This metric is determined by dividing the stock price by the company’s revenue. This is a popular metric because revenue is harder to manipulate on an income statement and thus is often considered a better indicator of performance. WTFC ​​has a P/S ratio of 2.65. In comparison, the average P/S ratio for its industry is 2.75.

Finally, investors should note that WTFC ​​has a P/CF ratio of 8.96. This data point considers a company’s operating cash flow and is often used to find companies that are undervalued considering their solid cash outlook. WTFC’s P/CF compares to its industry’s average P/CF of 15.34. WTFC’s P/CF has been as high as 10.61 and 7.83 over the past year, with a median of 9.33.

These numbers are just a few of the metrics that value investors often look at, but they show that Wintrust Financial is likely undervalued right now. When you factor that in and the strong earnings outlook, WTFC ​​looks like a great value stock right now.

Want the latest recommendations from Zacks Investment Research? Download the 7 best stocks for the next 30 days today. Click here to get this free report

Wintrust Financial Corporation (WTFC): Free Stock Analysis Report

To read this article on Zacks.com, click here.

Zacks Investment Research