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Is Principal Financial (PFG) a Great Value Stock Right Now?

Zacks Equity Research
·3 mins 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.

Of these, value investing is easily one of the most popular ways to find great stocks in any market environment. Value investors use fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.

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 Principal Financial (PFG). PFG is currently sporting a Zacks Rank of #2 (Buy), as well as an A grade for Value. The stock has a Forward P/E ratio of 6.84. This compares to its industry's average Forward P/E of 12.49. Over the past year, PFG's Forward P/E has been as high as 9.99 and as low as 4.10, with a median of 7.95.

PFG is also sporting a PEG ratio of 1.04. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. PFG's PEG compares to its industry's average PEG of 1.67. Over the past 52 weeks, PFG's PEG has been as high as 3.49 and as low as 0.49, with a median of 1.38.

Another valuation metric that we should highlight is PFG's P/B ratio of 0.73. 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 company's current P/B looks solid when compared to its industry's average P/B of 1.96. Over the past year, PFG's P/B has been as high as 1.14 and as low as 0.46, with a median of 0.89.

Value investors also use the P/S ratio. The P/S ratio is is calculated as price divided by sales. This is a popular metric because sales are harder to manipulate on an income statement, so they are often considered a better performance indicator. PFG has a P/S ratio of 0.7. This compares to its industry's average P/S of 1.87.

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


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