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

Zacks Equity Research
·2 mins read

Here at Zacks, we focus on our proven ranking system, which places an emphasis on earnings estimates and estimate revisions, to find winning stocks. But we also understand that investors develop their own strategies, so we are constantly looking at the latest trends in value, growth, and momentum to find strong companies for our readers.

Considering these trends, value investing is clearly one of the most preferred ways to find strong stocks in any type of market. Value investors use fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.

Zacks has developed the innovative Style Scores system to highlight stocks with specific traits. For example, value investors will be interested in stocks with great grades in the "Value" category. When paired with a high Zacks Rank, "A" grades in the Value category are among the strongest value stocks on the market today.

One company value investors might notice is Principal Financial (PFG). PFG is currently sporting a Zacks Rank of #2 (Buy), as well as an A grade for Value. The stock is trading with a P/E ratio of 7.96, which compares to its industry's average of 12.70. PFG's Forward P/E has been as high as 10.17 and as low as 4.10, with a median of 8.83, all within the past year.

We should also highlight that PFG has a P/B ratio of 0.95. The P/B is a method of comparing a stock's market value to 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 1.96. Within the past 52 weeks, PFG's P/B has been as high as 1.20 and as low as 0.46, with a median of 1.02.

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. PFG has a P/S ratio of 0.72. This compares to its industry's average P/S of 1.81.

These are only a few of the key metrics included in Principal Financial'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, PFG looks like an impressive value stock at the moment.


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Zacks Investment Research