Should Value Investors Buy Reinsurance Group of America (RGA) Stock?

RGA

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.

Considering these trends, value investing is clearly one of the most preferred ways to find strong stocks in any type of market. Value investors use fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.

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.

One company to watch right now is Reinsurance Group of America (RGA - Free Report) . RGA is currently holding a Zacks Rank of #2 (Buy) and a Value grade of A.

Another valuation metric that we should highlight is RGA's P/B ratio of 1.17. The P/B ratio pits a stock's market value against 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 1.61. RGA's P/B has been as high as 2.66 and as low as 1.14, with a median of 1.48, over the past year.

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. RGA has a P/S ratio of 0.54. This compares to its industry's average P/S of 0.91.

These are only a few of the key metrics included in Reinsurance Group of America'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, RGA looks like an impressive value stock at the moment.

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