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Is Principal Financial (PFG) Stock Undervalued Right Now?

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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 a variety of methods, including tried-and-true valuation metrics, to find these stocks.

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.

Principal Financial (PFG - Free Report) is a stock many investors are watching right now. PFG is currently sporting a Zacks Rank of #2 (Buy), as well as a Value grade of A. The stock has a Forward P/E ratio of 6.69. This compares to its industry's average Forward P/E of 12.42. Over the past year, PFG's Forward P/E has been as high as 9.99 and as low as 4.10, with a median of 7.75.

Investors will also notice that PFG has a PEG ratio of 1.02. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. PFG's PEG compares to its industry's average PEG of 1.66. PFG's PEG has been as high as 3.49 and as low as 0.49, with a median of 1.37, all within the past year.

Another valuation metric that we should highlight is PFG's P/B ratio of 0.72. 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 1.96. Over the past year, PFG's P/B has been as high as 1.13 and as low as 0.46, with a median of 0.85.

Value investors also use the P/S ratio. The P/S ratio is is calculated as price divided by sales. This is a prefered metric because revenue can't really be manipulated, so sales are often a truer performance indicator. PFG has a P/S ratio of 0.68. This compares to its industry's average P/S of 1.96.

These are only a few of the key metrics included in Principal Financial'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, PFG looks like an impressive value stock at the moment.


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