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 Woori Bank (NYSE:WF) 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, Woori Bank has a trailing twelve months PE ratio of 10.85, 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 20.66. If we focus on the stock’s long-term PE trend, the current level puts Woori Bank’s current PE ratio above its midpoint over the past five years, with the number having risen rapidly over the past few months.
Further, the stock’s PE also compares favorably with the broader industry’s trailing twelve months PE ratio, which stands at 17.41. At the very least, this indicates that the stock is relatively undervalued right now, compared to its peers.
We should also point out that Woori Bank has a forward PE ratio (price relative to this year’s earnings) of just 8.41, so it is fair to say that a slightly more value-oriented path may be ahead for Woori Bank stock in the near term too .
P/S Ratio
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, Woori Bank has a P/S ratio of about 1.46. This is significantly lower than the S&P 500 average, which comes in at 3.20 right now. Also, as we can see in the chart below, this is a little below the highs for this stock in particular over the past few years.
If anything, WF is towards the higher end of its range in the time period from a P/S metric, which suggests that the company’s stock price has already appreciated to some degree, relative to its sales.
Broad Value Outlook
In aggregate, Woori Bank currently has a Zacks Value Style Score of ‘A’, putting it into the top 20% of all stocks we cover from this look. This makes Woori Bank a solid choice for value investors, and some of its other key metrics make this pretty clear too.
For example, the PEG ratio for Woori Bank is just 1.38, a level that is relatively lower than the industry average of 1.46. The PEG ratio is a modified PE ratio that takes into account the stock’s earnings growth rate.
Additionally, its P/CF ratio (another great indicator of value) comes in at 1.57, which is significantly lower than the industry average of 4.12. Clearly, WF is a solid choice on the value front from multiple angles.
What About the Stock Overall?
Though Woori Bank 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 ‘A’. This gives WF a Zacks VGM score—or its overarching fundamental grade—of ‘B’. (You can read more about the Zacks Style Scores here >>)
Meanwhile, the company’s recent earnings estimates have been bullish. Both the current year and next year have seen one estimates go higher in the past sixty days compared to no movement in the opposite direction.
This has had a significant impact on the consensus estimate as the current quarter year estimate jumped 14.9% in the past two months, while the next year estimate has increased 15.7% over the same time frame. You can see the consensus estimate trend and recent price action for the stock in the chart below:
This positive trend signifies bullish analyst sentiment, and its Zacks Rank #1 (Strong Buy) indicates robust fundamentals and expectations of outperformance in the near term.
Bottom Line
Woori Bank is an inspired choice for value investors, as it is hard to beat its incredible lineup of statistics on this front. Furthermore, a strong industry rank (among Top 31% of more than 250 industries) and a Zacks Rank #1, instills our confidence on the stock.
On the flipside, over the past two years, the broader has clearly underperformed the market, as you can see below:
We believe, despite an unsatisfactory past industry performance, a good industry and Zacks rank signal that the stock is likely to benefit from favorable broader factors in the immediate future. Add to this robust value metrics, and we believe that we have a strong value contender in Woori Bank.
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Woori Bank (WF): Free Stock Analysis Report
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