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.
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 United Fire Group (UFCS). UFCS is currently holding a Zacks Rank #1 (Strong Buy) and a Value grade of A. The stock holds a P/E ratio of 10.09, while its industry has an average P/E of 27.66. UFCS's Forward P/E has been as high as 20.43 and as low as 9.98, with a median of 11.36, all within the past year.
We should also highlight that UFCS has a P/B ratio of 0.93. 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 company's current P/B looks solid when compared to its industry's average P/B of 1.54. Over the past 12 months, UFCS's P/B has been as high as 1.02 and as low as 0.62, with a median of 0.86.
Value investors also use the P/S ratio. The P/S ratio is calculated as price divided by sales. This is a preferred metric because revenue can't really be manipulated, so sales are often a truer performance indicator. UFCS has a P/S ratio of 0.62. This compares to its industry's average P/S of 1.32.
Finally, our model also underscores that UFCS has a P/CF ratio of 7.77. 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. UFCS's current P/CF looks attractive when compared to its industry's average P/CF of 12.74. Within the past 12 months, UFCS's P/CF has been as high as 13.42 and as low as 6.53, with a median of 9.55.
These figures are just a handful of the metrics value investors tend to look at, but they help show that United Fire Group is likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, UFCS feels like a great value stock at the moment.
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United Fire Group, Inc (UFCS): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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