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Are Investors Undervaluing Dynex Capital (DX) Right Now?

Zacks Equity Research
·2 min read

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.

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 fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.

In addition to the Zacks Rank, investors looking for stocks with specific traits can utilize our Style Scores system. Of course, value investors will be most interested in the system's "Value" category. Stocks with "A" grades for Value and high Zacks Ranks are among the best value stocks available at any given moment.

One company value investors might notice is Dynex Capital (DX). DX is currently sporting a Zacks Rank of #2 (Buy), as well as an A grade for Value. The stock holds a P/E ratio of 6.83, while its industry has an average P/E of 10.07. Over the past 52 weeks, DX's Forward P/E has been as high as 10.41 and as low as 4.23, with a median of 8.43.

Investors should also recognize that DX has a P/B ratio of 0.75. 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. This company's current P/B looks solid when compared to 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 0.92.

These are only a few of the key metrics included in Dynex Capital's strong Value grade, but they help show that the stock is likely undervalued right now. When factoring in the strength of its earnings outlook, DX looks like an impressive value stock at the moment.


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Zacks Investment Research