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 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 company value investors might notice is Radian Group (RDN). RDN is currently holding a Zacks Rank #2 (Buy) and a Value grade of A.
Investors should also recognize that RDN has a P/B ratio of 1.12. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. RDN's current P/B looks attractive when compared to its industry's average P/B of 2.59. Within the past 52 weeks, RDN's P/B has been as high as 1.19 and as low as 0.94, with a median of 1.04.
Finally, we should also recognize that RDN has a P/CF ratio of 7.66. This data point considers a firm's operating cash flow and is frequently used to find companies that are undervalued when considering their solid cash outlook. RDN's P/CF compares to its industry's average P/CF of 7.96. RDN's P/CF has been as high as 7.82 and as low as 6.53, with a median of 7.19, all within the past year.
These are only a few of the key metrics included in Radian Group's strong Value grade, but they help show that the stock is likely undervalued right now. When factoring in the strength of its earnings outlook, RDN looks like an impressive value stock at the moment.
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Radian Group Inc. (RDN): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).