Should Value Investors Buy Stewart Information Services (STC) Stock?

STC

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, value investing is easily one of the most popular ways to find great stocks in any market environment. Value investors rely on traditional forms of analysis on key valuation metrics to find stocks that they believe are undervalued, leaving room for profits.

On top of the Zacks Rank, investors can also look at our innovative Style Scores system to find stocks with specific traits. For example, value investors will want to focus on the "Value" category. Stocks with high Zacks Ranks and "A" grades for Value will be some of the highest-quality value stocks on the market today.

Stewart Information Services (STC - Free Report) is a stock many investors are watching right now. STC is currently sporting a Zacks Rank of #2 (Buy), as well as a Value grade of A. The stock is trading with P/E ratio of 9.64 right now. For comparison, its industry sports an average P/E of 23.99. Over the past year, STC's Forward P/E has been as high as 12.04 and as low as 4.91, with a median of 6.99.

Another valuation metric that we should highlight is STC's P/B ratio of 0.82. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. STC's current P/B looks attractive when compared to its industry's average P/B of 1.49. Over the past year, STC's P/B has been as high as 1.19 and as low as 0.72, with a median of 0.92.

Value investors also frequently use the P/S ratio. This metric is found by dividing a stock's price with the company's revenue. Some people prefer this metric because sales are harder to manipulate on an income statement. This means it could be a truer performance indicator. STC has a P/S ratio of 0.36. This compares to its industry's average P/S of 0.91.

Value investors will likely look at more than just these metrics, but the above data helps show that Stewart Information Services is likely undervalued currently. And when considering the strength of its earnings outlook, STC sticks out at as one of the market's strongest value stocks.

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