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 MB Financial Inc. 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:
PE Ratio
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, MB Financial has a trailing twelve months PE ratio of 17.7, as you can see in the chart below:
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This level actually compares pretty favorably with the market at large, as the PE for the S&P 500 stands at about 21.3. If we focus on the long-term PE trend, MB Financial’s current PE level puts it almost on par with its midpoint over the past five years.
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Further, the stock’s PE also compares favorably with its industry’s trailing twelve months PE ratio, which stands at 18.3. At the very least, this indicates that the stock is relatively undervalued right now, compared to its peers.
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We should also point out that MB Financial has a forward PE ratio (price relative to this year’s earnings) of 18, so it is fair to expect an increase in the company’s share price in the near future.
P/CF Ratio
An often overlooked ratio that can still be a great indicator of value is the price/cash flow metric. This ratio doesn’t take amortization and depreciation into account, so can give a more accurate picture of the financial health in a business. This is a preferred metric to some valuation investors because cash flows are (a) generally less prone to manipulation by the company’s management and (b) are less affected by variation in accounting policies between different companies.
The ratio is generally applied to find out whether a company’s stock is overpriced or underpriced with reference to its cash flows generation potential compared with its competitors. However, it is not commonly used for cross-industry comparison, as the average price to cash flow ratio varies from industry to industry.
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In this case, MB Financial’s P/CF ratio of 11.4 is lower than its industry average of 18, which indicates that the stock is somewhat undervalued in this respect.
Broad Value Outlook
In aggregate, MB Financial currently has a Zacks Value Style Score of B, putting it into the top 40% of all stocks we cover from this look. This makes MB Financial a solid choice for value investors.
What About the Stock Overall?
Though MB Financial 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 F and a Momentum score of D. This gives MBFI a Zacks VGM score—or its overarching fundamental grade—of D. (You can read more about the Zacks Style Scores here >>)
Meanwhile, the company’s recent earnings estimates have been unfavorable. The current year has seen no estimates going higher in the past thirty days compared to two lower, while the next year estimate has no three upward and four downward movements in the same time period.
As a result, the current year consensus estimate has remained unchanged in the past month, and the next year estimate has inched lower by 1.4%. You can see the consensus estimate trend and recent price action for the stock in the chart below:
MB Financial Inc. Price and Consensus
This somewhat bearish trend is why the stock has just a Zacks Rank #3 (Hold) and why we are looking for in-line performance from the company in the near term.
Bottom Line
MB Financial 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 43% out of more than 250 industries) further strengthens its growth potential.
So, value investors might want to wait for estimates and analyst sentiment to turn around in this name first, but once that happens, this stock could be a compelling pick.
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A medical advance is now at the flashpoint between theory and realization. Billions of dollars in research have poured into it. Companies are already generating substantial revenue, and even more wondrous products are in the pipeline.
Cures for a variety of deadly diseases are in sight, and so are big potential profits for early investors. Zacks names 5 stocks to buy now.
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Image: Bigstock
Should Value Investors Choose MB Financial (MBFI) Stock?
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 MB Financial Inc. 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:
PE Ratio
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, MB Financial has a trailing twelve months PE ratio of 17.7, 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 stands at about 21.3. If we focus on the long-term PE trend, MB Financial’s current PE level puts it almost on par with its midpoint over the past five years.
Further, the stock’s PE also compares favorably with its industry’s trailing twelve months PE ratio, which stands at 18.3. At the very least, this indicates that the stock is relatively undervalued right now, compared to its peers.
We should also point out that MB Financial has a forward PE ratio (price relative to this year’s earnings) of 18, so it is fair to expect an increase in the company’s share price in the near future.
P/CF Ratio
An often overlooked ratio that can still be a great indicator of value is the price/cash flow metric. This ratio doesn’t take amortization and depreciation into account, so can give a more accurate picture of the financial health in a business. This is a preferred metric to some valuation investors because cash flows are (a) generally less prone to manipulation by the company’s management and (b) are less affected by variation in accounting policies between different companies.
The ratio is generally applied to find out whether a company’s stock is overpriced or underpriced with reference to its cash flows generation potential compared with its competitors. However, it is not commonly used for cross-industry comparison, as the average price to cash flow ratio varies from industry to industry.
In this case, MB Financial’s P/CF ratio of 11.4 is lower than its industry average of 18, which indicates that the stock is somewhat undervalued in this respect.
Broad Value Outlook
In aggregate, MB Financial currently has a Zacks Value Style Score of B, putting it into the top 40% of all stocks we cover from this look. This makes MB Financial a solid choice for value investors.
What About the Stock Overall?
Though MB Financial 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 F and a Momentum score of D. This gives MBFI a Zacks VGM score—or its overarching fundamental grade—of D. (You can read more about the Zacks Style Scores here >>)
Meanwhile, the company’s recent earnings estimates have been unfavorable. The current year has seen no estimates going higher in the past thirty days compared to two lower, while the next year estimate has no three upward and four downward movements in the same time period.
As a result, the current year consensus estimate has remained unchanged in the past month, and the next year estimate has inched lower by 1.4%. You can see the consensus estimate trend and recent price action for the stock in the chart below:
MB Financial Inc. Price and Consensus
MB Financial Inc. Price and Consensus | MB Financial Inc. Quote
This somewhat bearish trend is why the stock has just a Zacks Rank #3 (Hold) and why we are looking for in-line performance from the company in the near term.
Bottom Line
MB Financial 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 43% out of more than 250 industries) further strengthens its growth potential.
So, value investors might want to wait for estimates and analyst sentiment to turn around in this name first, but once that happens, this stock could be a compelling pick.
Investor Alert: Breakthroughs Pending
A medical advance is now at the flashpoint between theory and realization. Billions of dollars in research have poured into it. Companies are already generating substantial revenue, and even more wondrous products are in the pipeline.
Cures for a variety of deadly diseases are in sight, and so are big potential profits for early investors. Zacks names 5 stocks to buy now.
Click here to see them >>