Should Value Investors Buy Computer Programs and Systems (CPSI) Stock?
Here at Zacks, our focus is on the proven Zacks Rank system, which emphasizes earnings estimates and estimate revisions to find great stocks. Neverthe...
While the proven Zacks Rank places an emphasis on earnings estimates and estimate revisions to find strong stocks, we also know that investors tend to develop their own individual strategies. With this in mind, we are always looking at value, growth, and momentum trends to discover great companies.
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 rely on traditional forms of analysis on key valuation metrics to find stocks that they believe are undervalued, leaving room for profits.
Zacks has developed the innovative Style Scores system to highlight stocks with specific traits. For example, value investors will be interested in stocks with great grades in the "Value" category. When paired with a high Zacks Rank, "A" grades in the Value category are among the strongest value stocks on the market today.
Computer Programs and Systems (CPSI) is a stock many investors are watching right now. CPSI is currently sporting a Zacks Rank of #2 (Buy), as well as an A grade for Value.
Investors should also recognize that CPSI has a P/B ratio of 2.47. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. This stock's P/B looks solid versus its industry's average P/B of 4.82. Over the past 12 months, CPSI's P/B has been as high as 2.55 and as low as 1.95, with a median of 2.20.
Value investors also love the P/S ratio, which is calculated by simply dividing a stock's price with the company's sales. This is a prefered metric because revenue can't really be manipulated, so sales are often a truer performance indicator. CPSI has a P/S ratio of 1.93. This compares to its industry's average P/S of 4.74.
Finally, investors will want to recognize that CPSI has a P/CF ratio of 15.23. This metric takes into account a company's operating cash flow and can be used to find stocks that are undervalued based on their solid cash outlook. This stock's P/CF looks attractive against its industry's average P/CF of 21.33. Over the past year, CPSI's P/CF has been as high as 17.50 and as low as 10.44, with a median of 14.96.
These are only a few of the key metrics included in Computer Programs and Systems'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, CPSI looks like an impressive value stock at the moment.
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Computer Programs and Systems, Inc. (CPSI): Free Stock Analysis Report
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