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.
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 rely on traditional forms of analysis on key valuation metrics to find stocks that they believe are undervalued, leaving room for profits.
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 United Fire Group (UFCS). UFCS is currently sporting a Zacks Rank #1 (Strong Buy), as well as a Value grade of A. The stock has a Forward P/E ratio of 10.16. This compares to its industry's average Forward P/E of 25.97. Over the past year, UFCS's Forward P/E has been as high as 20.43 and as low as 9.98, with a median of 11.30.
Another notable valuation metric for UFCS is its P/B ratio of 0.94. 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 stock's P/B looks solid versus its industry's average P/B of 1.37. UFCS's P/B has been as high as 1.02 and as low as 0.62, with a median of 0.87, over the past year.
Value investors also use the P/S ratio. The P/S ratio is calculated as price divided by sales. Some people prefer this metric because sales are harder to manipulate on an income statement. This means it could be a truer performance indicator. UFCS has a P/S ratio of 0.81. This compares to its industry's average P/S of 1.18.
Finally, investors should note that UFCS has a P/CF ratio of 7.83. This figure highlights a company's operating cash flow and can be used to find firms that are undervalued when considering their impressive cash outlook. This company's current P/CF looks solid when compared to its industry's average P/CF of 11.03. Over the past year, UFCS's P/CF has been as high as 13.42 and as low as 6.53, with a median of 9.51.
These are just a handful of the figures considered in United Fire 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 UFCS is an impressive value stock right now.
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United Fire Group, Inc (UFCS): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).