U.S. Markets open in 3 hrs 49 mins

Is Principal Financial (PFG) Stock Undervalued Right Now?

Zacks Equity Research

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.

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 stock to keep an eye on 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 9.85, which compares to its industry's average of 10.51. PFG's Forward P/E has been as high as 10.28 and as low as 6.93, with a median of 9.22, all within the past year.

Another valuation metric that we should highlight is PFG's P/B ratio of 1.26. 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 company's current P/B looks solid when compared to its industry's average P/B of 1.81. Within the past 52 weeks, PFG's P/B has been as high as 1.46 and as low as 0.99, with a median of 1.26.

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. PFG has a P/S ratio of 1.06. This compares to its industry's average P/S of 2.71.

Finally, we should also recognize that PFG has a P/CF ratio of 7.90. This metric takes into account a company's operating cash flow and can be used to find stocks that are undervalued based on their solid cash outlook. PFG's current P/CF looks attractive when compared to its industry's average P/CF of 12.81. PFG's P/CF has been as high as 7.90 and as low as 4.59, with a median of 5.87, all within the past year.

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.


Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
Principal Financial Group, Inc. (PFG) : Free Stock Analysis Report
 
To read this article on Zacks.com click here.
 
Zacks Investment Research