Are Investors Undervaluing Mercury General (MCY) Right Now?
While the proven Zacks Rank places an emphasis on earnings estimates and estimate revisions to find strong stocks, we also know that investors tend to develop their own individual strategies. With this in mind, we are always looking at value, growth, and momentum trends to discover great companies.
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 to watch right now is Mercury General (MCY). MCY is currently holding a Zacks Rank of #1 (Strong Buy) and a Value grade of A.
We should also highlight that MCY has a P/B ratio of 1.27. 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 solid versus its industry's average P/B of 1.52. Over the past year, MCY's P/B has been as high as 1.63 and as low as 0.97, with a median of 1.36.
Value investors also love the P/S ratio, which is calculated by simply dividing a stock's price with the company's sales. This is a prefered metric because revenue can't really be manipulated, so sales are often a truer performance indicator. MCY has a P/S ratio of 0.54. This compares to its industry's average P/S of 0.91.
If you're looking for another solid Insurance - Property and Casualty value stock, take a look at W.R. Berkley (WRB). WRB is a # 2 (Buy) stock with a Value score of A.
Shares of W.R. Berkley currently holds a Forward P/E ratio of 15.34, and its PEG ratio is 1.70. In comparison, its industry sports average P/E and PEG ratios of 25.53 and 2.41.
Over the last 12 months, WRB's P/E has been as high as 18.69, as low as 13.95, with a median of 16.25, and its PEG ratio has been as high as 2.08, as low as 1.55, with a median of 1.81.
W.R. Berkley also has a P/B ratio of 3.04 compared to its industry's price-to-book ratio of 1.52. Over the past year, its P/B ratio has been as high as 3.18, as low as 2.09, with a median of 2.62.
These figures are just a handful of the metrics value investors tend to look at, but they help show that Mercury General and W.R. Berkley are likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, MCY and WRB feels like a great value stock at the moment.
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