Are These Finance Stocks Undervalued Right Now?
Here at Zacks, our focus is on the proven Zacks Rank system, which emphasizes earnings estimates and estimate revisions to find great stocks. Nevertheless, we are always paying attention to...
The proven Zacks Rank system focuses on earnings estimates and estimate revisions to find winning stocks. Nevertheless, we know that our readers all have their own perspectives, so we are always looking at the latest trends in value, growth, and momentum to find strong picks.
Considering these trends, value investing is clearly one of the most preferred ways to find strong stocks in any type of market. Value investors use fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.
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 stock to keep an eye on is Franklin Resources (BEN). BEN is currently holding a Zacks Rank of #2 (Buy) and a Value grade of A. The stock is trading with a P/E ratio of 9.30, which compares to its industry's average of 12.91. Over the past 52 weeks, BEN's Forward P/E has been as high as 11.32 and as low as 8.27, with a median of 9.33.
Investors should also note that BEN holds a PEG ratio of 0.62. 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. BEN's PEG compares to its industry's average PEG of 0.65. Over the past 52 weeks, BEN's PEG has been as high as 1.69 and as low as 0.62, with a median of 0.75.
Another notable valuation metric for BEN is its P/B ratio of 1.43. 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. BEN's current P/B looks attractive when compared to its industry's average P/B of 2.92. Over the past 12 months, BEN's P/B has been as high as 1.60 and as low as 1.07, with a median of 1.35.
Value investors also frequently use the P/S ratio. This metric is found by dividing a stock's price with the company's revenue. This is a prefered metric because revenue can't really be manipulated, so sales are often a truer performance indicator. BEN has a P/S ratio of 1.99. This compares to its industry's average P/S of 3.11.
Finally, investors should note that BEN has a P/CF ratio of 7.39. 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. This stock's P/CF looks attractive against its industry's average P/CF of 14.66. Over the past 52 weeks, BEN's P/CF has been as high as 14.11 and as low as 6.37, with a median of 9.96.
Investors could also keep in mind Invesco (IVZ), an Financial - Investment Management stock with a Zacks Rank of # 2 (Buy) and Value grade of A.
Invesco is currently trading with a Forward P/E ratio of 7.18 while its PEG ratio sits at 0.53. Both of the company's metrics compare favorably to its industry's average P/E of 12.91 and average PEG ratio of 0.65.
Over the last 12 months, IVZ's P/E has been as high as 10.04, as low as 6.83, with a median of 8.52, and its PEG ratio has been as high as 1.60, as low as 0.51, with a median of 1.20.
Invesco sports a P/B ratio of 0.91 as well; this compares to its industry's price-to-book ratio of 2.92. In the past 52 weeks, IVZ's P/B has been as high as 1.23, as low as 0.70, with a median of 1.
Value investors will likely look at more than just these metrics, but the above data helps show that Franklin Resources and Invesco are likely undervalued currently. And when considering the strength of its earnings outlook, BEN and IVZ sticks out as one of the market's strongest value stocks.
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Franklin Resources, Inc. (BEN): Free Stock Analysis Report
Invesco Ltd. (IVZ): Free Stock Analysis Report
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