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Is Dynex Capital (DX) a Great Value Stock Right Now?

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.

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.

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 Dynex Capital (DX). DX is currently sporting a Zacks Rank of #2 (Buy) and an A for Value. The stock has a Forward P/E ratio of 8.88. This compares to its industry's average Forward P/E of 9.66. Over the last 12 months, DX's Forward P/E has been as high as 8.91 and as low as 7.66, with a median of 8.43.

Another valuation metric that we should highlight is DX's P/B ratio of 0.97. 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 stock's P/B looks solid versus its industry's average P/B of 1.25. DX's P/B has been as high as 1.02 and as low as 0.79, with a median of 0.92, over the past year.

Value investors also use the P/S ratio. The P/S ratio is is calculated as price divided by sales. This is a prefered metric because revenue can't really be manipulated, so sales are often a truer performance indicator. DX has a P/S ratio of 2.33. This compares to its industry's average P/S of 3.04.

These figures are just a handful of the metrics value investors tend to look at, but they help show that Dynex Capital is likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, DX feels like a great value stock at the moment.


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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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