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Are Investors Undervaluing AllianceBernstein (AB) Right Now?

Zacks Equity Research

The proven Zacks Rank system focuses on earnings estimates and estimate revisions to find winning stocks. Nevertheless, we know that our readers all have their own perspectives, so we are always looking at the latest trends in value, growth, and momentum to find 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 rely on traditional forms of analysis on key valuation metrics to find stocks that they believe are undervalued, leaving room for profits.

Zacks has developed the innovative Style Scores system to highlight stocks with specific traits. For example, value investors will be interested in stocks with great grades in the "Value" category. When paired with a high Zacks Rank, "A" grades in the Value category are among the strongest value stocks on the market today.

AllianceBernstein (AB) is a stock many investors are watching right now. AB is currently sporting a Zacks Rank of #2 (Buy), as well as a Value grade of A. The stock has a Forward P/E ratio of 10.61. This compares to its industry's average Forward P/E of 12.13. Over the past year, AB's Forward P/E has been as high as 12.79 and as low as 9.48, with a median of 11.26.

Value investors also love the P/S ratio, which is calculated by simply dividing a stock's price with the company's 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. AB has a P/S ratio of 0.87. This compares to its industry's average P/S of 2.45.

Finally, our model also underscores that AB has a P/CF ratio of 13.25. 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. AB's current P/CF looks attractive when compared to its industry's average P/CF of 17.67. Over the past year, AB's P/CF has been as high as 13.44 and as low as 8.86, with a median of 12.13.

These figures are just a handful of the metrics value investors tend to look at, but they help show that AllianceBernstein is likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, AB feels like a great value stock at the moment.


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