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 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.
One company value investors might notice is RenaissanceRe (RNR). RNR is currently holding a Zacks Rank #2 (Buy) and a Value grade of A.
Investors will also notice that RNR has a PEG ratio of 1.72. 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. RNR's industry currently sports an average PEG of 4.13. Over the past 52 weeks, RNR's PEG has been as high as 3.67 and as low as 1.39, with a median of 1.84.
Another valuation metric that we should highlight is RNR's P/B ratio of 1.14. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. RNR's current P/B looks attractive when compared to its industry's average P/B of 1.52. RNR's P/B has been as high as 1.49 and as low as 1.09, with a median of 1.24, over the past year.
Value investors also use the P/S ratio. The P/S ratio is calculated as price divided by sales. This is a popular metric because sales are harder to manipulate on an income statement, so they are often considered a better performance indicator. RNR has a P/S ratio of 0.88. This compares to its industry's average P/S of 1.24.
Finally, investors should note that RNR has a P/CF ratio of 5.13. 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. This company's current P/CF looks solid when compared to its industry's average P/CF of 12.65. Within the past 12 months, RNR's P/CF has been as high as 6.44 and as low as 3.18, with a median of 5.26.
Value investors will likely look at more than just these metrics, but the above data helps show that RenaissanceRe is likely undervalued currently. And when considering the strength of its earnings outlook, RNR sticks out as one of the market's strongest value stocks.
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RenaissanceRe Holdings Ltd. (RNR): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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