Are Investors Undervaluing American Equity Investment (AEL) Right Now?
Here at Zacks, our focus is on the proven Zacks Rank system, which emphasizes earnings estimates and estimate revisions to find great stocks. Nevertheless, we are always paying attention to the latest value, growth, and momentum trends to underscore strong picks.
Of these, value investing is easily one of the most popular ways to find great stocks in any market environment. 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 value investors might notice is American Equity Investment (AEL). AEL is currently sporting a Zacks Rank of #2 (Buy), as well as a Value grade of A. The stock is trading with a P/E ratio of 6.76, which compares to its industry's average of 7.61. Over the past year, AEL's Forward P/E has been as high as 8.10 and as low as 2.34, with a median of 5.27.
We should also highlight that AEL has a P/B ratio of 0.57. 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 company's current P/B looks solid when compared to its industry's average P/B of 1.32. AEL's P/B has been as high as 0.70 and as low as 0.23, with a median of 0.54, over the past year.
Finally, investors will want to recognize that AEL has a P/CF ratio of 8.63. This metric focuses on a firm's operating cash flow and is often used to find stocks that are undervalued based on the strength of their cash outlook. AEL's current P/CF looks attractive when compared to its industry's average P/CF of 10.84. Over the past 52 weeks, AEL's P/CF has been as high as 69.99 and as low as 1.73, with a median of 6.08.
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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