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 use tried-and-true metrics and fundamental analysis to find companies that they believe are undervalued at their current share price levels.
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 to watch right now is Radian Group (RDN). RDN is currently holding a Zacks Rank #2 (Buy) and a Value grade of A.
Another notable valuation metric for RDN is its P/B ratio of 1.12. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. This company's current P/B looks solid when compared to its industry's average P/B of 2.54. Over the past 12 months, RDN's P/B has been as high as 1.19 and as low as 0.94, with a median of 1.04.
Finally, our model also underscores that RDN has a P/CF ratio of 7.66. This metric takes into account a company's operating cash flow and can be used to find stocks that are undervalued based on their solid cash outlook. RDN's current P/CF looks attractive when compared to its industry's average P/CF of 7.84. Over the past 52 weeks, RDN's P/CF has been as high as 7.82 and as low as 6.53, with a median of 7.19.
Value investors will likely look at more than just these metrics, but the above data helps show that Radian Group is likely undervalued currently. And when considering the strength of its earnings outlook, RDN sticks out as one of the market's strongest value stocks.
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Radian Group Inc. (RDN): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).