Are Investors Undervaluing American Equity Investment Life Holding (AEL) Right Now?
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 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 American Equity Investment Life Holding (AEL). AEL is currently sporting a Zacks Rank of #2 (Buy) and an A for Value.
Another valuation metric that we should highlight is AEL's P/B ratio of 1.58. The P/B ratio is used to compare a stock's market value with its book value, which is defined as total assets minus total liabilities. AEL's current P/B looks attractive when compared to its industry's average P/B of 1.62. AEL's P/B has been as high as 1.58 and as low as 0.81, with a median of 1.10, over the past year.
Finally, investors should note that AEL has a P/CF ratio of 3.75. This data point considers a firm's operating cash flow and is frequently used to find companies that are undervalued when considering their solid cash outlook. AEL's P/CF compares to its industry's average P/CF of 12.07. Over the past year, AEL's P/CF has been as high as 3.75 and as low as 1.16, with a median of 1.73.
Investors could also keep in mind Manulife Financial Corp (MFC), an Insurance - Life Insurance stock with a Zacks Rank of # 2 (Buy) and Value grade of A.
Shares of Manulife Financial Corp are currently trading at a forward earnings multiple of 7.49 and a PEG ratio of 0.75 compared to its industry's P/E and PEG ratios of 6.97 and 0.67, respectively.
Over the last 12 months, MFC's P/E has been as high as 8.44, as low as 6.04, with a median of 7.48, and its PEG ratio has been as high as 0.84, as low as 0.60, with a median of 0.75.
Manulife Financial Corp sports a P/B ratio of 1.12 as well; this compares to its industry's price-to-book ratio of 1.62. In the past 52 weeks, MFC's P/B has been as high as 1.19, as low as 0.77, with a median of 0.91.
Value investors will likely look at more than just these metrics, but the above data helps show that American Equity Investment Life Holding and Manulife Financial Corp are likely undervalued currently. And when considering the strength of its earnings outlook, AEL and MFC sticks out as one of the market's strongest value stocks.
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American Equity Investment Life Holding Company (AEL) : Free Stock Analysis Report
Manulife Financial Corp (MFC) : Free Stock Analysis Report
