Should Value Investors Buy Invesco Mortgage Capital (IVR) Stock?

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.

Luckily, Zacks has developed its own Style Scores system in an effort to find stocks with specific traits. Value investors will be interested in the system's "Value" category. Stocks with both "A" grades in the Value category and high Zacks Ranks are among the strongest value stocks on the market right now.

One company to watch right now is Invesco Mortgage Capital (IVR). IVR is currently sporting a Zacks Rank #2 (Buy), as well as a Value grade of A. The stock holds a P/E ratio of 3.7, while its industry has an average P/E of 7.97. Over the last 12 months, IVR's Forward P/E has been as high as 4.12 and as low as 2.63, with a median of 3.41.

We should also highlight that IVR has a P/B ratio of 0.9. The P/B ratio is used to compare a stock's market value with its book value, which is defined as total assets minus total liabilities. IVR's current P/B looks attractive when compared to its industry's average P/B of 0.96. Over the past year, IVR's P/B has been as high as 0.99 and as low as 0.70, with a median of 0.88.

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. IVR has a P/S ratio of 2.47. This compares to its industry's average P/S of 2.49.

TPG Mortgage Investment Trust Inc. (MITT) may be another strong REIT and Equity Trust stock to add to your shortlist. MITT is a Zacks Rank of #2 (Buy) stock with a Value grade of A.

TPG Mortgage Investment Trust Inc. also has a P/B ratio of 0.73 compared to its industry's price-to-book ratio of 0.96. Over the past year, its P/B ratio has been as high as 0.74, as low as 0.53, with a median of 0.67.

These are just a handful of the figures considered in Invesco Mortgage Capital and TPG Mortgage Investment Trust Inc.'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 IVR and MITT is an impressive value stock right now.

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This article originally published on Zacks Investment Research (zacks.com).

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