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.
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 fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.
In addition to the Zacks Rank, investors looking for stocks with specific traits can utilize our Style Scores system. Of course, value investors will be most interested in the system's "Value" category. Stocks with "A" grades for Value and high Zacks Ranks are among the best value stocks available at any given moment.
One company value investors might notice is The Hanover Insurance Group (THG). THG is currently sporting a Zacks Rank #1 (Strong Buy), as well as an A grade for Value. The stock is trading with a P/E ratio of 10.86, which compares to its industry's average of 26.82. Over the past 52 weeks, THG's Forward P/E has been as high as 13.52 and as low as 10.12, with a median of 11.25.
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 1.18. This compares to its industry's average P/S of 1.34.
Investors could also keep in mind United Fire Group (UFCS), another Insurance - Property and Casualty stock with a Zacks Rank of #2 (Buy) and Value grade of A.
Furthermore, United Fire Group holds a P/B ratio of 0.94 and its industry's price-to-book ratio is 1.43. UFCS's P/B has been as high as 1.02, as low as 0.62, with a median of 0.87 over the past 12 months.
These figures are just a handful of the metrics value investors tend to look at, but they help show that The Hanover Insurance Group and United Fire Group are likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, THG and UFCS feels like a great value stock at the moment.
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The Hanover Insurance Group, Inc. (THG): Free Stock Analysis Report
United Fire Group, Inc (UFCS): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).