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.
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 Radian (RDN - Free Report) . RDN is currently sporting a Zacks Rank of #2 (Buy), as well as an A grade for Value. The stock is trading with a P/E ratio of 8.15, which compares to its industry's average of 9.29. Over the past 52 weeks, RDN's Forward P/E has been as high as 8.48 and as low as 5.42, with a median of 7.55.
Another valuation metric that we should highlight is RDN's P/B ratio of 1.33. 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 company's current P/B looks solid when compared to its industry's average P/B of 1.57. Over the past year, RDN's P/B has been as high as 1.38 and as low as 0.95, with a median of 1.25.
Value investors will likely look at more than just these metrics, but the above data helps show that Radian is likely undervalued currently. And when considering the strength of its earnings outlook, RDN sticks out at as one of the market's strongest value stocks.