Should Value Investors Buy Artisan Partners Asset Management (APAM) Stock?
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.
Looking at the history of these trends, perhaps none is more beloved than value investing. This strategy simply looks to identify companies that are being undervalued by the broader market. 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.
Artisan Partners Asset Management (APAM) is a stock many investors are watching right now. APAM is currently holding a Zacks Rank of #1 (Strong Buy) and a Value grade of A. The stock is trading with P/E ratio of 9.58 right now. For comparison, its industry sports an average P/E of 10. Over the last 12 months, APAM's Forward P/E has been as high as 11.57 and as low as 7.22, with a median of 10.04.
Value investors also love the P/S ratio, which is calculated by simply dividing a stock's price with the company's sales. This is a popular metric because sales are harder to manipulate on an income statement, so they are often considered a better performance indicator. APAM has a P/S ratio of 2.43. This compares to its industry's average P/S of 2.5.
Finally, investors will want to recognize that APAM has a P/CF ratio of 11.08. 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. APAM's P/CF compares to its industry's average P/CF of 12.31. Over the past 52 weeks, APAM's P/CF has been as high as 23.87 and as low as 7.18, with a median of 13.78.
Value investors will likely look at more than just these metrics, but the above data helps show that Artisan Partners Asset Management is likely undervalued currently. And when considering the strength of its earnings outlook, APAM sticks out at as one of the market's strongest value stocks.
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