Should Value Investors Buy Waddell & Reed Financial (WDR) 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.

Of these, value investing is easily one of the most popular ways to find great stocks in any market environment. 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 Waddell & Reed Financial (WDR). WDR is currently sporting a Zacks Rank of #2 (Buy), as well as an A grade for Value. The stock is trading with P/E ratio of 9.04 right now. For comparison, its industry sports an average P/E of 11.17. Over the last 12 months, WDR's Forward P/E has been as high as 14.35 and as low as 8.27, with a median of 9.56.

We also note that WDR holds a PEG ratio of 0.90. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. WDR's industry has an average PEG of 1.10 right now. Over the past 52 weeks, WDR's PEG has been as high as 1.62 and as low as 0.90, with a median of 1.28.

Another notable valuation metric for WDR is its P/B ratio of 1.77. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. This company's current P/B looks solid when compared to its industry's average P/B of 1.83. Over the past 12 months, WDR's P/B has been as high as 2.24 and as low as 1.65, with a median of 1.87.

Finally, we should also recognize that WDR has a P/CF ratio of 8.03. This metric focuses on a firm's operating cash flow and is often used to find stocks that are undervalued based on the strength of their cash outlook. WDR's current P/CF looks attractive when compared to its industry's average P/CF of 14.01. Within the past 12 months, WDR's P/CF has been as high as 12.27 and as low as 7.48, with a median of 9.39.

These are only a few of the key metrics included in Waddell & Reed Financial's strong Value grade, but they help show that the stock is likely undervalued right now. When factoring in the strength of its earnings outlook, WDR looks like an impressive 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.

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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