Is Ally Financial (ALLY) a Great Value Stock Right Now?

Here at Zacks, our focus is on the proven Zacks Rank system, which emphasizes earnings estimates and estimate revisions to find great stocks. Nevertheless, we are always paying attention to the latest value, growth, and momentum trends to underscore strong picks.

Of these, value investing is easily one of the most popular ways to find great stocks in any market environment. Value investors rely on traditional forms of analysis on key valuation metrics to find stocks that they believe are undervalued, leaving room for profits.

Luckily, Zacks has developed its own Style Scores system in an effort to find stocks with specific traits. Value investors will be interested in the system's "Value" category. Stocks with both "A" grades in the Value category and high Zacks Ranks are among the strongest value stocks on the market right now.

One stock to keep an eye on is Ally Financial (ALLY). ALLY is currently sporting a Zacks Rank #2 (Buy), as well as a Value grade of A. The stock holds a P/E ratio of 9.09, while its industry has an average P/E of 9.54. Over the past year, ALLY's Forward P/E has been as high as 11.99 and as low as 7.19, with a median of 8.66.

Investors will also notice that ALLY has a PEG ratio of 0.25. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. ALLY's industry currently sports an average PEG of 0.46. ALLY's PEG has been as high as 0.43 and as low as 0.22, with a median of 0.28, all within the past year.

If you're looking for another solid Financial - Consumer Loans value stock, take a look at Encore Capital Group (ECPG). ECPG is a Zacks Rank of #2 (Buy) stock with a Value score of A.

Encore Capital Group sports a P/B ratio of 1.16 as well; this compares to its industry's price-to-book ratio of 0.80. In the past 52 weeks, ECPG's P/B has been as high as 1.58, as low as 0.78, with a median of 1.09.

These are only a few of the key metrics included in Ally Financial and Encore Capital Group strong Value grade, but they help show that the stocks are likely undervalued right now. When factoring in the strength of its earnings outlook, ALLY and ECPG look like an impressive value stock at the moment.

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

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