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Are Investors Undervaluing Prudential (PRU) Right Now?

Zacks

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 latest value, growth, and momentum trends to underscore 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 a variety of methods, including tried-and-true valuation metrics, to find these stocks.

In addition to the Zacks Rank, investors looking for stocks with specific traits can utilize our Style Scores system. Of course, value investors will be most interested in the system’s “Value” category. Stocks with “A” grades for Value and high Zacks Ranks are among the best value stocks available at any given moment.

One company value investors might notice is Prudential (PRU). PRU is currently holding a Zacks Rank of #2 (Buy) and a Value grade of A. The stock holds a P/E ratio of 7.68, while its industry has an average P/E of 9.34. Over the last 12 months, PRU’s Forward P/E has been as high as 8.75 and as low as 5.93, with a median of 7.60.


We also note that PRU holds a PEG ratio of 0.85. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company’s expected earnings growth rate. PRU’s industry has an average PEG of 1.03 right now. PRU’s PEG has been as high as 1.03 and as low as 0.66, with a median of 0.85, all within the past year.

Another valuation metric that we should highlight is PRU’s P/B ratio of 0.83. 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. This company’s current P/B looks solid when compared to its industry’s average P/B of 1.71. Within the past 52 weeks, PRU’s P/B has been as high as 0.94 and as low as 0.68, with a median of 0.81.

Value investors also use the P/S ratio. The P/S ratio is is calculated as price divided by sales. This is a prefered metric because revenue can’t really be manipulated, so sales are often a truer performance indicator. PRU has a P/S ratio of 0.71. This compares to its industry’s average P/S of 1.06.

These are just a handful of the figures considered in Prudential’s great Value grade. Still, they help show that the stock is likely being undervalued at the moment. Add this to the strength of its earnings outlook, and we can clearly see that PRU is an impressive value stock right now.


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Zacks Investment Research
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