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 use fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.
On top of the Zacks Rank, investors can also look at our innovative Style Scores system to find stocks with specific traits. For example, value investors will want to focus on the "Value" category. Stocks with high Zacks Ranks and "A" grades for Value will be some of the highest-quality value stocks on the market today.
One company value investors might notice is Affiliated Managers Group (AMG). AMG is currently sporting a Zacks Rank #2 (Buy), as well as a Value grade of A. The stock is trading with a P/E ratio of 8.23, which compares to its industry's average of 17.77. Over the past year, AMG's Forward P/E has been as high as 8.93 and as low as 6.14, with a median of 7.49.
Investors should also note that AMG holds a PEG ratio of 0.60. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. AMG's PEG compares to its industry's average PEG of 1.23. Over the past 52 weeks, AMG's PEG has been as high as 0.71 and as low as 0.47, with a median of 0.58.
We should also highlight that AMG has a P/B ratio of 1.42. 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 attractive against its industry's average P/B of 3.88. AMG's P/B has been as high as 1.44 and as low as 1.01, with a median of 1.28, over the past year.
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. AMG has a P/S ratio of 2.88. This compares to its industry's average P/S of 3.17.
These are only a few of the key metrics included in Affiliated Managers Group'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, AMG looks like an impressive value stock at the moment.
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Affiliated Managers Group, Inc. (AMG): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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