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Should Value Investors Buy UBS (UBS) Stock?

Zacks Equity Research
·3 min 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.

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 company to watch right now is UBS (UBS). UBS is currently sporting a Zacks Rank of #2 (Buy), as well as an A grade for Value.

Investors will also notice that UBS has a PEG ratio of 1.32. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. UBS's PEG compares to its industry's average PEG of 1.64. Over the last 12 months, UBS's PEG has been as high as 9.61 and as low as 0.89, with a median of 1.81.

Another notable valuation metric for UBS is its P/B ratio of 0.86. 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 0.97. Over the past 12 months, UBS's P/B has been as high as 0.90 and as low as 0.51, with a median of 0.76.

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. UBS has a P/S ratio of 1.59. This compares to its industry's average P/S of 1.6.

Finally, investors should note that UBS has a P/CF ratio of 6.85. This metric focuses on a firm's operating cash flow and is often used to find stocks that are undervalued based on the strength of their cash outlook. UBS's P/CF compares to its industry's average P/CF of 13.73. Over the past year, UBS's P/CF has been as high as 8.15 and as low as 4.65, with a median of 6.68.

These are just a handful of the figures considered in UBS's great Value grade. Still, they help show that the stock is likely being undervalued at the moment. Add this to the strength of its earnings outlook, and we can clearly see that UBS is an impressive value stock right now.


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