Should Value Investors Buy Navient (NAVI) Stock?
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.
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.
One company value investors might notice is Navient (NAVI). NAVI is currently sporting a Zacks Rank of #1 (Strong Buy) and an A for Value. The stock holds a P/E ratio of 5.05, while its industry has an average P/E of 7.31. NAVI's Forward P/E has been as high as 6.98 and as low as 4.19, with a median of 5.96, all within the past year.
Investors should also recognize that NAVI has a P/B ratio of 0.81. The P/B ratio is used to compare a stock's market value with its book value, which is defined as total assets minus total liabilities. NAVI's current P/B looks attractive when compared to its industry's average P/B of 0.87. Within the past 52 weeks, NAVI's P/B has been as high as 1.05 and as low as 0.58, with a median of 0.87.
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 prefered metric because revenue can't really be manipulated, so sales are often a truer performance indicator. NAVI has a P/S ratio of 0.46. This compares to its industry's average P/S of 1.24.
These figures are just a handful of the metrics value investors tend to look at, but they help show that Navient is likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, NAVI feels like a great value stock at the moment.
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