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Are Investors Undervaluing Argo Group (ARGO) 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.

Looking at the history of these trends, perhaps none is more beloved than value investing. This strategy simply looks to identify companies that are being undervalued by the broader market. 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.

One stock to keep an eye on is Argo Group . ARGO 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 8.90 right now. For comparison, its industry sports an average P/E of 25.61. Over the past year, ARGO's Forward P/E has been as high as 27.47 and as low as 4.73, with a median of 9.17.

Another notable valuation metric for ARGO is its P/B ratio of 0.80. The P/B ratio is used to compare a stock's market value with its book value, which is defined as total assets minus total liabilities. This company's current P/B looks solid when compared to its industry's average P/B of 1.55. ARGO's P/B has been as high as 1.32 and as low as 0.52, with a median of 0.88, over the past year.

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. ARGO has a P/S ratio of 0.5. This compares to its industry's average P/S of 0.93.

Another great Insurance - Property and Casualty stock you could consider is First American Financial (FAF - Free Report) , which is a # 2 (Buy) stock with a Value Score of A.

First American Financial also has a P/B ratio of 1.30 compared to its industry's price-to-book ratio of 1.55. Over the past year, its P/B ratio has been as high as 1.53, as low as 0.95, with a median of 1.20.

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


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