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 stock to keep an eye on is United Fire Group (UFCS). UFCS is currently sporting a Zacks Rank #1 (Strong Buy), as well as a Value grade of A. The stock holds a P/E ratio of 10.16, while its industry has an average P/E of 28.00. Over the last 12 months, UFCS's Forward P/E has been as high as 20.43 and as low as 9.98, with a median of 11.30.
Another valuation metric that we should highlight is UFCS's P/B ratio of 0.94. 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 solid versus its industry's average P/B of 1.52. Within the past 52 weeks, UFCS's P/B has been as high as 1.02 and as low as 0.62, with a median of 0.87.
Value investors also use the P/S ratio. The P/S ratio is calculated as price divided by sales. Some people prefer this metric because sales are harder to manipulate on an income statement. This means it could be a truer performance indicator. UFCS has a P/S ratio of 0.69. This compares to its industry's average P/S of 1.27.
Finally, investors will want to recognize that UFCS has a P/CF ratio of 7.83. 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. This stock's P/CF looks attractive against its industry's average P/CF of 13.17. Over the past year, UFCS's P/CF has been as high as 13.42 and as low as 6.53, with a median of 9.51.
These are just a handful of the figures considered in United Fire Group'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 UFCS is an impressive value stock right now.
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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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