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Are Investors Undervaluing Manulife Financial (MFC) Right Now?

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Zacks Equity Research
·3 min read
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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.

On top of the Zacks Rank, investors can also look at our innovative Style Scores system to find stocks with specific traits. For example, value investors will want to focus on the "Value" category. Stocks with high Zacks Ranks and "A" grades for Value will be some of the highest-quality value stocks on the market today.

One company to watch right now is Manulife Financial (MFC). MFC is currently sporting a Zacks Rank of #2 (Buy), as well as an A grade for Value. The stock is trading with P/E ratio of 7.36 right now. For comparison, its industry sports an average P/E of 7.49. MFC's Forward P/E has been as high as 9.23 and as low as 3.88, with a median of 7.15, all within the past year.

Investors should also note that MFC holds a PEG ratio of 0.74. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. MFC's PEG compares to its industry's average PEG of 0.77. Within the past year, MFC's PEG has been as high as 3.41 and as low as 0.39, with a median of 0.74.

We should also highlight that MFC has a P/B ratio of 0.86. 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. This stock's P/B looks solid versus its industry's average P/B of 1.32. Within the past 52 weeks, MFC's P/B has been as high as 1.18 and as low as 0.50, with a median of 0.76.

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. MFC has a P/S ratio of 0.61. This compares to its industry's average P/S of 0.69.

Value investors will likely look at more than just these metrics, but the above data helps show that Manulife Financial is likely undervalued currently. And when considering the strength of its earnings outlook, MFC sticks out at as one of the market's strongest value stocks.


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