We've been asking ourselves recently if the market has placed a fair valuation on Wintrust Financial. Let's dive into some of the fundamental values of this mid-cap Finance company to determine if there might be an opportunity here for value-minded investors.
Wintrust Financial Corporation operates as a financial holding company. The company belongs to the Finance sector, which has an average price to earnings (P/E) ratio of 14.34 and an average price to book (P/B) ratio of 1.57. In contrast, Wintrust Financial has a trailing 12 month P/E ratio of 8.9 and a P/B ratio of 1.0.
P/B ratios are calculated by dividing the company's market value by its equity's book value. Equity refers to all of the company's assets minus its liabilities. Traditionally, a P/B ratio of around 1 shows that a company is fairly valued, but owing to consistently higher valuations in the modern era, investors generally compare against sector averages.
When we divideWintrust Financial's P/E ratio by its expected five-year EPS growth rate, we obtain a PEG ratio of 0.69, which indicates that the market is undervaluing the company's projected growth (a PEG ratio of 1 indicates a fairly valued company). Your analysis of the stock shouldn't end here. Rather, a good PEG ratio should alert you that it may be worthwhile to take a closer look at the stock.
