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, 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.
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 to watch right now is Mercury General (MCY). MCY is currently sporting a Zacks Rank #1 (Strong Buy) and an A for Value. The stock has a Forward P/E ratio of 12.08. This compares to its industry's average Forward P/E of 28.43. MCY's Forward P/E has been as high as 163.64 and as low as 6.83, with a median of 13.27, all within the past year.
Value investors also love the P/S ratio, which is calculated by simply dividing a stock's price with the company's sales. This is a preferred metric because revenue can't really be manipulated, so sales are often a truer performance indicator. MCY has a P/S ratio of 0.89. This compares to its industry's average P/S of 1.25.
Finally, investors should note that MCY has a P/CF ratio of 9.50. This figure highlights a company's operating cash flow and can be used to find firms that are undervalued when considering their impressive cash outlook. This stock's P/CF looks attractive against its industry's average P/CF of 13.38. Over the past 52 weeks, MCY's P/CF has been as high as 10.18 and as low as 4.83, with a median of 7.64.
If you're looking for another solid Insurance - Property and Casualty value stock, take a look at The Travelers Companies (TRV). TRV is a Zacks Rank of #1 (Strong Buy) stock with a Value score of A.
The Travelers Companies is trading at a forward earnings multiple of 11.60 at the moment, with a PEG ratio of 2.87. This compares to its industry's average P/E of 28.43 and average PEG ratio of 3.75.
Over the past year, TRV's P/E has been as high as 14.64, as low as 11.13, with a median of 12.44; its PEG ratio has been as high as 4.80, as low as 1.01, with a median of 2.83 during the same time period.
Furthermore, The Travelers Companies holds a P/B ratio of 2.11 and its industry's price-to-book ratio is 1.54. TRV's P/B has been as high as 2.22, as low as 1.85, with a median of 2.07 over the past 12 months.
These are only a few of the key metrics included in Mercury General and The Travelers Companies strong Value grade, but they help show that the stocks are likely undervalued right now. When factoring in the strength of its earnings outlook, MCY and TRV look like an impressive value stock at the moment.
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Mercury General Corporation (MCY): Free Stock Analysis Report The Travelers Companies, Inc. (TRV): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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