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Should Value Investors Buy Allstate (ALL) Stock?

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, 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 a variety of methods, including tried-and-true valuation metrics, to find these stocks.

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 Allstate (ALL). ALL is currently sporting a Zacks Rank of #1 (Strong Buy), as well as a Value grade of A. The stock has a Forward P/E ratio of 7.95. This compares to its industry's average Forward P/E of 22.51. Over the past 52 weeks, ALL's Forward P/E has been as high as 12.14 and as low as 7.06, with a median of 10.37.

Investors should also note that ALL holds a PEG ratio of 1.06. 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. ALL's industry currently sports an average PEG of 3.11. Over the last 12 months, ALL's PEG has been as high as 1.46 and as low as 0.85, with a median of 1.27.

We should also highlight that ALL has a P/B ratio of 1.18. Investors use the P/B ratio to look at a stock's market value versus 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 1.20. Within the past 52 weeks, ALL's P/B has been as high as 1.71 and as low as 1, with a median of 1.49.

Value investors also use the P/S ratio. The P/S ratio is is calculated as price divided by sales. Some people prefer this metric because sales are harder to manipulate on an income statement. This means it could be a truer performance indicator. ALL has a P/S ratio of 0.67. This compares to its industry's average P/S of 0.83.

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


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Zacks Investment Research