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Should Value Investors Buy American Financial Group (AFG) Stock?

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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.

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.

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.

American Financial Group (AFG - Free Report) is a stock many investors are watching right now. AFG is currently sporting a Zacks Rank of #2 (Buy), as well as a Value grade of A. The stock holds a P/E ratio of 12.75, while its industry has an average P/E of 29.02. AFG's Forward P/E has been as high as 1,155.88 and as low as 11.87, with a median of 14.24, all within the past year.

Finally, we should also recognize that AFG has a P/CF ratio of 6.08. 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. This stock's P/CF looks attractive against its industry's average P/CF of 7.09. Over the past year, AFG's P/CF has been as high as 6.99 and as low as 3.91, with a median of 4.88.

Universal Insurance Holdings (UVE - Free Report) may be another strong Insurance - Property and Casualty stock to add to your shortlist. UVE is a # 2 (Buy) stock with a Value grade of A.

Universal Insurance Holdings also has a P/B ratio of 1.01 compared to its industry's price-to-book ratio of 1.30. Over the past year, its P/B ratio has been as high as 1.41, as low as 0.82, with a median of 0.95.

Value investors will likely look at more than just these metrics, but the above data helps show that American Financial Group and Universal Insurance Holdings are likely undervalued currently. And when considering the strength of its earnings outlook, AFG and UVE sticks out as one of the market's strongest value stocks.


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American Financial Group, Inc. (AFG) - free report >>

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