Is American Financial Group (AFG) Stock Undervalued Right Now?

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.

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.

One company to watch right now is American Financial Group (AFG). AFG is currently sporting a Zacks Rank #2 (Buy), as well as an A grade for Value. The stock is trading with P/E ratio of 12.99 right now. For comparison, its industry sports an average P/E of 27.19. Over the last 12 months, AFG's Forward P/E has been as high as 12.99 and as low as 10.77, with a median of 11.69.

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. AFG has a P/S ratio of 1.29. This compares to its industry's average P/S of 1.3.

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

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This article originally published on Zacks Investment Research (zacks.com).

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