Here at Zacks, we focus on our proven ranking system, which places an emphasis on earnings estimates and estimate revisions, to find winning stocks. But we also understand that investors develop their own strategies, so we are constantly looking at the latest trends in value, growth, and momentum to find strong companies for our readers.
Looking at the history of these trends, perhaps none is more beloved than value investing. This strategy simply looks to identify companies that are being undervalued by the broader market. Value investors use fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.
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 company value investors might notice is United Fire Group (UFCS). UFCS is currently sporting a Zacks Rank of #2 (Buy), as well as an A grade for Value. The stock is trading with a P/E ratio of 11.25, which compares to its industry's average of 29.14. Over the past year, UFCS's Forward P/E has been as high as 20.43 and as low as 10.36, with a median of 14.11.
We should also highlight that UFCS has a P/B ratio of 0.87. 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. This company's current P/B looks solid when compared to its industry's average P/B of 1.51. Over the past 12 months, UFCS's P/B has been as high as 1.02 and as low as 0.62, with a median of 0.81.
Value investors also use the P/S ratio. The P/S ratio is 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. UFCS has a P/S ratio of 0.55. This compares to its industry's average P/S of 1.28.
Finally, we should also recognize that UFCS has a P/CF ratio of 9.68. 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 11.16. UFCS's P/CF has been as high as 13.42 and as low as -96.79, with a median of 9.81, all within the past year.
These figures are just a handful of the metrics value investors tend to look at, but they help show that United Fire Group is likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, UFCS feels like a great value stock at the moment.
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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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