Should Value Investors Buy Ambac (AMBC) Stock?
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.
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 Ambac (AMBC). AMBC is currently sporting a Zacks Rank of #1 (Strong Buy), as well as a Value grade of A. The stock is trading with a P/E ratio of 24.45, which compares to its industry's average of 25.72. Over the past year, AMBC's Forward P/E has been as high as 25,659.91 and as low as -7,878.35, with a median of 38.49.
Investors should also recognize that AMBC has a P/B ratio of 0.56. 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 stock's P/B looks attractive against its industry's average P/B of 1.45. Over the past year, AMBC's P/B has been as high as 0.73 and as low as 0.39, with a median of 0.50.
Finally, our model also underscores that AMBC has a P/CF ratio of 3.53. This figure highlights a company's operating cash flow and can be used to find firms that are undervalued when considering their impressive cash outlook. AMBC's P/CF compares to its industry's average P/CF of 8.79. AMBC's P/CF has been as high as 3.56 and as low as 1.13, with a median of 1.33, all within the past year.
These figures are just a handful of the metrics value investors tend to look at, but they help show that Ambac is likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, AMBC feels like a great value stock at the moment.
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Ambac Financial Group, Inc. (AMBC) : Free Stock Analysis Report
