Should Value Investors Buy Donegal Group (DGICA) Stock?
While the proven Zacks Rank places an emphasis on earnings estimates and estimate revisions to find strong stocks, we also know that investors tend to develop their own individual strategies. With this in mind, we are always looking at value, growth, and momentum trends to discover great companies.
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.
Donegal Group (DGICA) is a stock many investors are watching right now. DGICA is currently sporting a Zacks Rank of #1 (Strong Buy), as well as a Value grade of A. The stock is trading with P/E ratio of 11.44 right now. For comparison, its industry sports an average P/E of 22.67. DGICA's Forward P/E has been as high as 16.71 and as low as 10.55, with a median of 14.97, all within the past year.
Investors should also recognize that DGICA has a P/B ratio of 0.88. 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 solid versus its industry's average P/B of 1.20. DGICA's P/B has been as high as 0.99 and as low as 0.74, with a median of 0.93, over the past year.
Value investors also frequently use the P/S ratio. This metric is found by dividing a stock's price with the company's revenue. This is a prefered metric because revenue can't really be manipulated, so sales are often a truer performance indicator. DGICA has a P/S ratio of 0.55. This compares to its industry's average P/S of 0.85.
Value investors will likely look at more than just these metrics, but the above data helps show that Donegal Group is likely undervalued currently. And when considering the strength of its earnings outlook, DGICA sticks out at as one of the market's strongest value stocks.
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Donegal Group, Inc. (DGICA) : Free Stock Analysis Report
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