Here at Zacks, we focus on our proven ranking system, which places an emphasis on earnings estimates and estimate revisions, to find winning stocks. But we also understand that investors develop their own strategies, so we are constantly looking at the latest trends in value, growth, and momentum to find strong companies for our readers.
Considering these trends, value investing is clearly one of the most preferred ways to find strong stocks in any type of market. Value investors rely on traditional forms of analysis on key valuation metrics to find stocks that they believe are undervalued, leaving room for profits.
On top of the Zacks Rank, investors can also look at our innovative Style Scores system to find stocks with specific traits. For example, value investors will want to focus on the "Value" category. Stocks with high Zacks Ranks and "A" grades for Value will be some of the highest-quality value stocks on the market today.
One stock to keep an eye on is The Hanover Insurance Group (THG). THG is currently sporting a Zacks Rank #1 (Strong Buy) and an A for Value. The stock is trading with a P/E ratio of 10.86, which compares to its industry's average of 27.76. THG's Forward P/E has been as high as 13.52 and as low as 10.12, with a median of 11.25, all within the past year.
Value investors also frequently use the P/S ratio. This metric is found by dividing a stock's price with the company's revenue. Some people prefer this metric because sales are harder to manipulate on an income statement. This means it could be a truer performance indicator. THG has a P/S ratio of 1.17. This compares to its industry's average P/S of 1.35.
Finally, our model also underscores that THG has a P/CF ratio of 11.21. 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. This stock's P/CF looks attractive against its industry's average P/CF of 11.81. Within the past 12 months, THG's P/CF has been as high as 19.14 and as low as 10.39, with a median of 13.62.
These are just a handful of the figures considered in The Hanover Insurance Group'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 THG is an impressive value stock right now.
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The Hanover Insurance Group, Inc. (THG): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).