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.
Looking at the history of these trends, perhaps none is more beloved than value investing. This strategy simply looks to identify companies that are being undervalued by the broader market. Value investors use tried-and-true metrics and fundamental analysis to find companies that they believe are undervalued at their current share price levels.
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 Reinsurance Group of America (RGA). RGA is currently sporting a Zacks Rank #2 (Buy) and an A for Value. The stock is trading with a P/E ratio of 7.54, which compares to its industry's average of 9.17. Over the past 52 weeks, RGA's Forward P/E has been as high as 10.24 and as low as 7.17, with a median of 8.48.
We should also highlight that RGA has a P/B ratio of 1.02. 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. This stock's P/B looks attractive against its industry's average P/B of 2.08. RGA's P/B has been as high as 1.47 and as low as 0.96, with a median of 1.18, over 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. This is a preferred metric because revenue can't really be manipulated, so sales are often a truer performance indicator. RGA has a P/S ratio of 0.58. This compares to its industry's average P/S of 0.83.
These figures are just a handful of the metrics value investors tend to look at, but they help show that Reinsurance Group of America is likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, RGA feels like a great value stock at the moment.
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Reinsurance Group of America, Incorporated (RGA): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).