While the proven Zacks Rank places an emphasis on earnings estimates and estimate revisions to find strong stocks, we also know that investors tend to develop their own individual strategies. With this in mind, we are always looking at value, growth, and momentum trends to discover great companies.
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.
Zacks has developed the innovative Style Scores system to highlight stocks with specific traits. For example, value investors will be interested in stocks with great grades in the "Value" category. When paired with a high Zacks Rank, "A" grades in the Value category are among the strongest value stocks on the market today.
One stock to keep an eye on is Principal Financial (PFG - Free Report) . PFG is currently sporting a Zacks Rank of #2 (Buy) and an A for Value. The stock has a Forward P/E ratio of 9.69. This compares to its industry's average Forward P/E of 12.51. Over the past 52 weeks, PFG's Forward P/E has been as high as 13.69 and as low as 8.96, with a median of 10.48.
We also note that PFG holds a PEG ratio of 1.22. 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 industry currently sports an average PEG of 1.24. Over the last 12 months, PFG's PEG has been as high as 1.37 and as low as 0.95, with a median of 1.13.
We should also highlight that PFG has a P/B ratio of 1.42. 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 solid versus its industry's average P/B of 2.01. Over the past 12 months, PFG's P/B has been as high as 1.72 and as low as 1.23, with a median of 1.41.
Finally, investors should note that PFG has a P/CF ratio of 5.67. This data point considers a firm's operating cash flow and is frequently used to find companies that are undervalued when considering their solid cash outlook. PFG's P/CF compares to its industry's average P/CF of 15.55. Over the past year, PFG's P/CF has been as high as 11.15 and as low as 5.14, with a median of 6.42.
These figures are just a handful of the metrics value investors tend to look at, but they help show that Principal Financial is likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, PFG feels like a great value stock at the moment.