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.
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 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 stock to keep an eye on is United Fire Group (UFCS). UFCS is currently sporting a Zacks Rank of #2 (Buy) and an A for Value. The stock is trading with P/E ratio of 11.12 right now. For comparison, its industry sports an average P/E of 29.64. UFCS's Forward P/E has been as high as 20.43 and as low as 10.36, with a median of 13.92, all within the past year.
Another notable valuation metric for UFCS is its P/B ratio of 0.89. 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 1.63. 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 0.82.
Value investors also use the P/S ratio. The P/S ratio is 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 0.56. This compares to its industry's average P/S of 1.34.
Finally, our model also underscores that UFCS has a P/CF ratio of 9.87. 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 11.42. Within the past 12 months, UFCS's P/CF has been as high as 13.42 and as low as -93.36, with a median of 9.83.
Value investors will likely look at more than just these metrics, but the above data helps show that United Fire Group is likely undervalued currently. And when considering the strength of its earnings outlook, UFCS sticks out at as one of the market's strongest value stocks.
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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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