Should Value Investors Buy Universal Insurance Holdings (UVE) Stock?

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.

Of these, perhaps no stock market trend is more popular than value investing, which is a strategy that has proven to be successful in all sorts of market environments. Value investors rely on traditional forms of analysis on key valuation metrics to find stocks that they believe are undervalued, leaving room for profits.

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 stock to keep an eye on is Universal Insurance Holdings (UVE). UVE is currently sporting a Zacks Rank #2 (Buy), as well as an A grade for Value. The stock is trading with a P/E ratio of 9.17, which compares to its industry's average of 26.59. UVE's Forward P/E has been as high as 12.67 and as low as 6.58, with a median of 8.58, all within the past year.

Value investors also use the P/S ratio. The P/S ratio is calculated as price divided by 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. UVE has a P/S ratio of 0.78. This compares to its industry's average P/S of 1.34.

Finally, investors will want to recognize that UVE has a P/CF ratio of 9.67. This figure highlights a company's operating cash flow and can be used to find firms that are undervalued when considering their impressive cash outlook. This company's current P/CF looks solid when compared to its industry's average P/CF of 10.11. UVE's P/CF has been as high as 10.53 and as low as 5.48, with a median of 8.73, all within the past year.

These are just a handful of the figures considered in Universal Insurance Holdings'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 UVE is an impressive value stock right now.

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

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