Are Investors Undervaluing American Equity Investment (AEL) Right Now?
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, value investing is easily one of the most popular ways to find great stocks in any market environment. Value investors use a variety of methods, including tried-and-true valuation metrics, to find these stocks.
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.
American Equity Investment (AEL) is a stock many investors are watching right now. AEL is currently sporting a Zacks Rank of #2 (Buy) and an A for Value. The stock holds a P/E ratio of 5.32, while its industry has an average P/E of 7.53. Over the past 52 weeks, AEL's Forward P/E has been as high as 10.22 and as low as 5.25, with a median of 7.74.
Investors should also recognize that AEL has a P/B ratio of 0.56. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. This company's current P/B looks solid when compared to its industry's average P/B of 1.57. Over the past year, AEL's P/B has been as high as 1.39 and as low as 0.55, with a median of 1.08.
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. AEL has a P/S ratio of 0.58. This compares to its industry's average P/S of 0.7.
Finally, investors should note that AEL has a P/CF ratio of 4.08. 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. AEL's P/CF compares to its industry's average P/CF of 4.76. Over the past year, AEL's P/CF has been as high as 5.22 and as low as 1.97, with a median of 3.29.
These are just a handful of the figures considered in American Equity Investment'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 AEL is an impressive value stock right now.
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