Should Value Investors Buy Universal Insurance Holdings (UVE) Stock?

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 tried-and-true metrics and fundamental analysis to find companies that they believe are undervalued at their current share price levels.

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.

Universal Insurance Holdings (UVE) is a stock many investors are watching right now. UVE is currently sporting a Zacks Rank #2 (Buy), as well as an A grade for Value.

Value investors also frequently use the P/S ratio. This metric is found by dividing a stock's price with the company's revenue. This is a popular metric because sales are harder to manipulate on an income statement, so they are often considered a better performance indicator. UVE has a P/S ratio of 0.48. This compares to its industry's average P/S of 1.32.

Finally, investors should note that UVE has a P/CF ratio of 9.67. This data point considers a firm's operating cash flow and is frequently used to find companies that are undervalued when considering their solid cash outlook. UVE's current P/CF looks attractive when compared to its industry's average P/CF of 12.93. Over the past 52 weeks, UVE's P/CF has been as high as 10.53 and as low as 5.48, with a median of 8.73.

These are just a handful of the figures considered in Universal Insurance Holdings's great Value grade. Still, they help show that the stock is likely being undervalued at the moment. Add this to the strength of its earnings outlook, and we can clearly see that UVE is an impressive value stock right now.

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This article originally published on Zacks Investment Research (zacks.com).

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