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Is Principal Financial (PFG) a Great Value Stock 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, 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 use fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.

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.

One company value investors might notice is Principal Financial (PFG). PFG 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 9.14, which compares to its industry's average of 11.17. Over the last 12 months, PFG's Forward P/E has been as high as 13.69 and as low as 8.96, with a median of 10.38.

We should also highlight that PFG has a P/B ratio of 1.35. The P/B ratio pits a stock's market value against 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 1.83. Over the past year, PFG's P/B has been as high as 1.72 and as low as 1.23, with a median of 1.41.

Finally, investors will want to recognize that PFG has a P/CF ratio of 5.41. This data point considers a firm's operating cash flow and is frequently used to find companies that are undervalued when considering their solid cash outlook. PFG's current P/CF looks attractive when compared to its industry's average P/CF of 14.01. Over the past 52 weeks, PFG's P/CF has been as high as 9.68 and as low as 5.14, with a median of 6.34.

Value investors will likely look at more than just these metrics, but the above data helps show that Principal Financial is likely undervalued currently. And when considering the strength of its earnings outlook, PFG sticks out at as one of the market's strongest value stocks.

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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.


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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