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 fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.
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 Universal Insurance Holdings (UVE). UVE is currently holding a Zacks Rank #2 (Buy) and a Value grade of A. The stock holds a P/E ratio of 9.17, while its industry has an average P/E of 27.21. Over the past year, UVE's Forward P/E has been as high as 12.67 and as low as 6.58, with a median of 8.58.
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. UVE has a P/S ratio of 0.74. This compares to its industry's average P/S of 1.31.
Finally, we should also recognize that UVE has a P/CF ratio of 9.67. 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. UVE's P/CF compares to its industry's average P/CF of 11.55. Over the past 52 weeks, UVE's P/CF has been as high as 10.53 and as low as 5.48, with a median of 8.73.
Value investors will likely look at more than just these metrics, but the above data helps show that Universal Insurance Holdings is likely undervalued currently. And when considering the strength of its earnings outlook, UVE sticks out as one of the market's strongest value stocks.
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UNIVERSAL INSURANCE HOLDINGS INC (UVE): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).