The proven Zacks Rank system focuses on earnings estimates and estimate revisions to find winning stocks. Nevertheless, we know that our readers all have their own perspectives, so we are always looking at the latest trends in value, growth, and momentum to find 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.
Luckily, Zacks has developed its own Style Scores system in an effort to find stocks with specific traits. Value investors will be interested in the system's "Value" category. Stocks with both "A" grades in the Value category and high Zacks Ranks are among the strongest value stocks on the market right now.
One company value investors might notice is Mercury General (MCY). MCY is currently sporting a Zacks Rank #1 (Strong Buy) and an A for Value. The stock holds a P/E ratio of 12.08, while its industry has an average P/E of 27.77. Over the past 52 weeks, MCY's Forward P/E has been as high as 163.64 and as low as 6.83, with a median of 13.27.
Value investors also love the P/S ratio, which is calculated by simply dividing a stock's price with the company's sales. Some people prefer this metric because sales are harder to manipulate on an income statement. This means it could be a truer performance indicator. MCY has a P/S ratio of 1. This compares to its industry's average P/S of 1.33.
Finally, investors will want to recognize that MCY has a P/CF ratio of 9.50. This metric focuses on a firm's operating cash flow and is often used to find stocks that are undervalued based on the strength of their cash outlook. MCY's P/CF compares to its industry's average P/CF of 11.70. Within the past 12 months, MCY's P/CF has been as high as 10.18 and as low as 4.83, with a median of 7.64.
These are just a handful of the figures considered in Mercury General's great Value grade. Still, they help show that the stock is likely being undervalued at the moment. Add this to the strength of its earnings outlook, and we can clearly see that MCY is an impressive value stock right now.
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Mercury General Corporation (MCY): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).