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.
Considering these trends, value investing is clearly one of the most preferred ways to find strong stocks in any type of 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.
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 company value investors might notice is MetLife (MET). MET is currently sporting a Zacks Rank of #2 (Buy), as well as an A grade for Value. The stock is trading with a P/E ratio of 8.33, which compares to its industry's average of 9.18. Over the last 12 months, MET's Forward P/E has been as high as 9.04 and as low as 6.84, with a median of 8.14.
We also note that MET holds a PEG ratio of 0.99. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. MET's PEG compares to its industry's average PEG of 1. Within the past year, MET's PEG has been as high as 0.99 and as low as 0.54, with a median of 0.72.
Another notable valuation metric for MET is its P/B ratio of 0.79. 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. MET's current P/B looks attractive when compared to its industry's average P/B of 1.47. Over the past 12 months, MET's P/B has been as high as 0.92 and as low as 0.71, with a median of 0.83.
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. MET has a P/S ratio of 0.67. This compares to its industry's average P/S of 1.04.
Value investors will likely look at more than just these metrics, but the above data helps show that MetLife is likely undervalued currently. And when considering the strength of its earnings outlook, MET sticks out at as one of the market's strongest value stocks.
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