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Is American Equity Investment (AEL) Stock Undervalued Right Now?

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Here at Zacks, our focus is on the proven Zacks Rank system, which emphasizes earnings estimates and estimate revisions to find great stocks. Nevertheless, we are always paying attention to the latest value, growth, and momentum trends to underscore strong picks.

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 tried-and-true metrics and fundamental analysis to find companies that they believe are undervalued at their current share price levels.

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.

American Equity Investment (AEL - Free Report) is a stock many investors are watching right now. AEL 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 7.81, while its industry has an average P/E of 10.38. AEL's Forward P/E has been as high as 10.49 and as low as 6.07, with a median of 8.65, all within the past year.

Another notable valuation metric for AEL is its P/B ratio of 1.14. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. AEL's current P/B looks attractive when compared to its industry's average P/B of 2.09. Over the past year, AEL's P/B has been as high as 1.39 and as low as 0.93, with a median of 1.20.

Value investors also frequently use the P/S ratio. This metric is found by dividing a stock's price with the company's revenue. This is a prefered metric because revenue can't really be manipulated, so sales are often a truer performance indicator. AEL has a P/S ratio of 0.86. This compares to its industry's average P/S of 0.93.

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


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