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.
Looking at the history of these trends, perhaps none is more beloved than value investing. This strategy simply looks to identify companies that are being undervalued by the broader market. Value investors use a variety of methods, including tried-and-true valuation metrics, to find these stocks.
In addition to the Zacks Rank, investors looking for stocks with specific traits can utilize our Style Scores system. Of course, value investors will be most interested in the system's "Value" category. Stocks with "A" grades for Value and high Zacks Ranks are among the best value stocks available at any given moment.
Prudential (PUK) is a stock many investors are watching right now. PUK is currently holding a Zacks Rank of #2 (Buy) and a Value grade of A. The stock is trading with a P/E ratio of 8.69, which compares to its industry's average of 9.89. PUK's Forward P/E has been as high as 17.46 and as low as 7.66, with a median of 10.80, all within the past year.
We also note that PUK holds a PEG ratio of 0.97. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. PUK's industry has an average PEG of 0.98 right now. Over the last 12 months, PUK's PEG has been as high as 1.94 and as low as 0.85, with a median of 1.20.
Another valuation metric that we should highlight is PUK's P/B ratio of 1.77. 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 attractive against its industry's average P/B of 2.29. PUK's P/B has been as high as 3.47 and as low as 1.55, with a median of 2.11, over the past year.
Radian Group (RDN) may be another strong Insurance - Multi line stock to add to your shortlist. RDN is a # 2 (Buy) stock with a Value grade of A.
Shares of Radian Group currently holds a Forward P/E ratio of 6.10, and its PEG ratio is 1.22. In comparison, its industry sports average P/E and PEG ratios of 9.89 and 0.98.
Over the last 12 months, RDN's P/E has been as high as 7.75, as low as 5.53, with a median of 6.54, and its PEG ratio has been as high as 1.55, as low as 1.11, with a median of 1.31.
Additionally, Radian Group has a P/B ratio of 0.85 while its industry's price-to-book ratio sits at 2.29. For RDN, this valuation metric has been as high as 1.04, as low as 0.76, with a median of 0.92 over the past year.
Value investors will likely look at more than just these metrics, but the above data helps show that Prudential and Radian Group are likely undervalued currently. And when considering the strength of its earnings outlook, PUK and RDN sticks out as one of the market's strongest value stocks.
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