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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.
Considering these trends, value investing is clearly one of the most preferred ways to find strong stocks in any type of market. 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.
One company to watch right now is First American Financial (FAF - Free Report) . FAF is currently holding a Zacks Rank of #2 (Buy) and a Value grade of A.
Another notable valuation metric for FAF is its P/B ratio of 1.27. The P/B is a method of comparing a stock's market value to 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 1.46. Over the past 12 months, FAF's P/B has been as high as 1.54 and as low as 1.21, with a median of 1.42.
Value investors also frequently use the P/S ratio. This metric is found by dividing a stock's price with the company's revenue. Some people prefer this metric because sales are harder to manipulate on an income statement. This means it could be a truer performance indicator. FAF has a P/S ratio of 0.8. This compares to its industry's average P/S of 1.12.
Finally, we should also recognize that FAF has a P/CF ratio of 5.16. This metric focuses on a firm's operating cash flow and is often used to find stocks that are undervalued based on the strength of their cash outlook. This company's current P/CF looks solid when compared to its industry's average P/CF of 7.43. Over the past 52 weeks, FAF's P/CF has been as high as 7.25 and as low as 4.93, with a median of 5.98.
Investors could also keep in mind Stewart Information Services (STC - Free Report) , an Insurance - Property and Casualty stock with a Zacks Rank of # 1 (Strong Buy) and Value grade of A.
Furthermore, Stewart Information Services holds a P/B ratio of 1.34 and its industry's price-to-book ratio is 1.46. STC's P/B has been as high as 1.77, as low as 1.29, with a median of 1.47 over the past 12 months.
These are only a few of the key metrics included in First American Financial and Stewart Information Services strong Value grade, but they help show that the stocks are likely undervalued right now. When factoring in the strength of its earnings outlook, FAF and STC look like an impressive value stock at the moment.
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Are These Finance Stocks Undervalued Right Now?
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.
Considering these trends, value investing is clearly one of the most preferred ways to find strong stocks in any type of market. 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.
One company to watch right now is First American Financial (FAF - Free Report) . FAF is currently holding a Zacks Rank of #2 (Buy) and a Value grade of A.
Another notable valuation metric for FAF is its P/B ratio of 1.27. The P/B is a method of comparing a stock's market value to 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 1.46. Over the past 12 months, FAF's P/B has been as high as 1.54 and as low as 1.21, with a median of 1.42.
Value investors also frequently use the P/S ratio. This metric is found by dividing a stock's price with the company's revenue. Some people prefer this metric because sales are harder to manipulate on an income statement. This means it could be a truer performance indicator. FAF has a P/S ratio of 0.8. This compares to its industry's average P/S of 1.12.
Finally, we should also recognize that FAF has a P/CF ratio of 5.16. This metric focuses on a firm's operating cash flow and is often used to find stocks that are undervalued based on the strength of their cash outlook. This company's current P/CF looks solid when compared to its industry's average P/CF of 7.43. Over the past 52 weeks, FAF's P/CF has been as high as 7.25 and as low as 4.93, with a median of 5.98.
Investors could also keep in mind Stewart Information Services (STC - Free Report) , an Insurance - Property and Casualty stock with a Zacks Rank of # 1 (Strong Buy) and Value grade of A.
Furthermore, Stewart Information Services holds a P/B ratio of 1.34 and its industry's price-to-book ratio is 1.46. STC's P/B has been as high as 1.77, as low as 1.29, with a median of 1.47 over the past 12 months.
These are only a few of the key metrics included in First American Financial and Stewart Information Services strong Value grade, but they help show that the stocks are likely undervalued right now. When factoring in the strength of its earnings outlook, FAF and STC look like an impressive value stock at the moment.