Are Investors Undervaluing These Finance Stocks 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.
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 a variety of methods, including tried-and-true valuation metrics, to find these stocks.
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.
Affiliated Managers Group (AMG) is a stock many investors are watching right now. AMG is currently sporting a Zacks Rank of #2 (Buy), as well as a Value grade of A. The stock holds a P/E ratio of 7.74, while its industry has an average P/E of 13.98. Over the past year, AMG's Forward P/E has been as high as 10.30 and as low as 7.41, with a median of 8.79.
AMG is also sporting a PEG ratio of 0.48. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. AMG's PEG compares to its industry's average PEG of 0.71. AMG's PEG has been as high as 0.68 and as low as 0.46, with a median of 0.56, all within the past year.
We should also highlight that AMG has a P/B ratio of 2.07. 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 attractive against its industry's average P/B of 2.84. Within the past 52 weeks, AMG's P/B has been as high as 2.45 and as low as 1.36, with a median of 2.07.
Value investors also use the P/S ratio. The P/S ratio is is calculated as price divided by sales. This is a prefered metric because revenue can't really be manipulated, so sales are often a truer performance indicator. AMG has a P/S ratio of 2.98. This compares to its industry's average P/S of 3.08.
Finally, we should also recognize that AMG has a P/CF ratio of 12.89. This metric focuses on a firm's operating cash flow and is often used to find stocks that are undervalued based on the strength of their cash outlook. This company's current P/CF looks solid when compared to its industry's average P/CF of 14.73. Over the past 52 weeks, AMG's P/CF has been as high as 19.96 and as low as 11.85, with a median of 14.15.
Investors could also keep in mind Invesco (IVZ), an Financial - Investment Management stock with a Zacks Rank of # 2 (Buy) and Value grade of A.
Shares of Invesco are currently trading at a forward earnings multiple of 7.29 and a PEG ratio of 0.54 compared to its industry's P/E and PEG ratios of 13.98 and 0.71, respectively.
Over the past year, IVZ's P/E has been as high as 10.04, as low as 6.83, with a median of 8.54; its PEG ratio has been as high as 1.60, as low as 0.51, with a median of 0.56 during the same time period.
Invesco also has a P/B ratio of 0.92 compared to its industry's price-to-book ratio of 2.84. Over the past year, its P/B ratio has been as high as 1.23, as low as 0.70, with a median of 1.
Value investors will likely look at more than just these metrics, but the above data helps show that Affiliated Managers Group and Invesco are likely undervalued currently. And when considering the strength of its earnings outlook, AMG and IVZ sticks out as one of the market's strongest value stocks.
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