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 rely on traditional forms of analysis on key valuation metrics to find stocks that they believe are undervalued, leaving room for profits.
Zacks has developed the innovative Style Scores system to highlight stocks with specific traits. For example, value investors will be interested in stocks with great grades in the "Value" category. When paired with a high Zacks Rank, "A" grades in the Value category are among the strongest value stocks on the market today.
Selective Insurance Group (SIGI) is a stock many investors are watching right now. SIGI is currently sporting a Zacks Rank #2 (Buy), as well as a Value grade of A. The stock is trading with P/E ratio of 9.89 right now. For comparison, its industry sports an average P/E of 27.91. SIGI's Forward P/E has been as high as 25.81 and as low as 9.60, with a median of 11.46, all within the past year.
We should also highlight that SIGI has a P/B ratio of 1.49. 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 attractive against its industry's average P/B of 1.50. Over the past 12 months, SIGI's P/B has been as high as 2.09 and as low as 1.44, with a median of 1.77.
Value investors also love the P/S ratio, which is calculated by simply dividing a stock's price with the company's 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. SIGI has a P/S ratio of 1.09. This compares to its industry's average P/S of 1.31.
Finally, our model also underscores that SIGI has a P/CF ratio of 11.43. 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 stock's P/CF looks attractive against its industry's average P/CF of 11.75. Within the past 12 months, SIGI's P/CF has been as high as 24.20 and as low as 11.07, with a median of 20.78.
These figures are just a handful of the metrics value investors tend to look at, but they help show that Selective Insurance Group is likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, SIGI feels like a great value stock at the moment.
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Selective Insurance Group, Inc. (SIGI): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).