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Is Principal Financial Group (PFG) 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 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.

Principal Financial Group (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 is trading with P/E ratio of 10.47 right now. For comparison, its industry sports an average P/E of 15.28. Over the last 12 months, PFG's Forward P/E has been as high as 13.02 and as low as 9.30, with a median of 10.50.

Another notable valuation metric for PFG is its P/B ratio of 1.75. The P/B ratio pits a stock's market value against 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 3.12. Over the past year, PFG's P/B has been as high as 2.21 and as low as 1.49, with a median of 1.74.

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 popular metric because sales are harder to manipulate on an income statement, so they are often considered a better performance indicator. PFG has a P/S ratio of 1.37. This compares to its industry's average P/S of 2.49.

Finally, we should also recognize that PFG has a P/CF ratio of 14.47. 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. PFG's P/CF compares to its industry's average P/CF of 28.85. Over the past 52 weeks, PFG's P/CF has been as high as 14.59 and as low as 3.14, with a median of 7.89.

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


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