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Is First American Financial (FAF) a Great Value Stock 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 tried-and-true metrics and fundamental analysis to find companies that they believe are undervalued at their current share price levels.

In addition to the Zacks Rank, investors looking for stocks with specific traits can utilize our Style Scores system. Of course, value investors will be most interested in the system's "Value" category. Stocks with "A" grades for Value and high Zacks Ranks are among the best value stocks available at any given moment.

One company to watch right now is First American Financial (FAF - Free Report) . FAF is currently sporting a Zacks Rank of #2 (Buy), as well as an A grade for Value.

We should also highlight that FAF has a P/B ratio of 1.10. The P/B is a method of comparing a stock's market value to 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 1.39. Over the past 12 months, FAF's P/B has been as high as 1.54 and as low as 1.10, with a median of 1.42.

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. FAF has a P/S ratio of 0.69. This compares to its industry's average P/S of 1.1.

Finally, investors should note that FAF has a P/CF ratio of 4.48. This metric takes into account a company's operating cash flow and can be used to find stocks that are undervalued based on their solid cash outlook. FAF's current P/CF looks attractive when compared to its industry's average P/CF of 7.10. FAF's P/CF has been as high as 6.99 and as low as 4.48, with a median of 5.87, all within the past year.

If you're looking for another solid Insurance - Property and Casualty value stock, take a look at Kingstone Companies (KINS - Free Report) . KINS is a # 2 (Buy) stock with a Value score of A.

Kingstone Companies sports a P/B ratio of 0.67 as well; this compares to its industry's price-to-book ratio of 1.39. In the past 52 weeks, KINS's P/B has been as high as 1.04, as low as 0.63, with a median of 0.81.

These are just a handful of the figures considered in First American Financial and Kingstone Companies'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 FAF and KINS is an impressive value stock right now.


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