Are Investors Undervaluing Atlas Financial (AFH) Right Now?
Here at Zacks, our focus is on the proven Zacks Rank system, which emphasizes earnings estimates and estimate revisions to find great stocks. Nevertheless, we are always paying attention to the latest value, growth, and momentum trends to underscore strong picks.
Of these, value investing is easily one of the most popular ways to find great stocks in any market environment. Value investors rely on traditional forms of analysis on key valuation metrics to find stocks that they believe are undervalued, leaving room for profits.
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 Atlas Financial (AFH). AFH is currently sporting a Zacks Rank of #2 (Buy), as well as an A grade for Value.
Another valuation metric that we should highlight is AFH's P/B ratio of 0.96. 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. AFH's current P/B looks attractive when compared to its industry's average P/B of 1.34. Within the past 52 weeks, AFH's P/B has been as high as 2.83 and as low as 0.94, with a median of 1.32.
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. AFH has a P/S ratio of 0.43. This compares to its industry's average P/S of 1.1.
These are just a handful of the figures considered in Atlas Financial's great Value grade. Still, they help show that the stock is likely being undervalued at the moment. Add this to the strength of its earnings outlook, and we can clearly see that AFH is an impressive value stock right now.
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