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Is Dynex Capital (DX) Stock Undervalued Right Now?

Zacks Equity Research
·2 min read

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.

Of these, value investing is easily one of the most popular ways to find great stocks in any market environment. 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 company to watch right now is Dynex Capital (DX). DX is currently sporting a Zacks Rank of #1 (Strong Buy) and an A for Value. The stock is trading with P/E ratio of 5.35 right now. For comparison, its industry sports an average P/E of 10.07. Over the last 12 months, DX's Forward P/E has been as high as 10.41 and as low as 4.23, with a median of 8.50.

Another notable valuation metric for DX is its P/B ratio of 0.59. 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 1.31. Over the past year, DX's P/B has been as high as 1.10 and as low as 0.47, with a median of 0.94.

Value investors will likely look at more than just these metrics, but the above data helps show that Dynex Capital is likely undervalued currently. And when considering the strength of its earnings outlook, DX sticks out at as one of the market's strongest value stocks.

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