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Is Allstate (ALL) a Great Value Stock Right Now?

Zacks

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.

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.

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 to watch right now is Allstate (ALL). ALL is currently sporting a Zacks Rank of #2 (Buy) and an A for Value. The stock holds a P/E ratio of 10.55, while its industry has an average P/E of 24.62. Over the last 12 months, ALL’s Forward P/E has been as high as 11.46 and as low as 8.42, with a median of 10.24.


Investors will also notice that ALL has a PEG ratio of 1.27. 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. ALL’s industry currently sports an average PEG of 2.94. ALL’s PEG has been as high as 1.38 and as low as 1.01, with a median of 1.23, all within the past year.

Value investors also frequently use the P/S ratio. This metric is found by dividing a stock’s price with the company’s revenue. Some people prefer this metric because sales are harder to manipulate on an income statement. This means it could be a truer performance indicator. ALL has a P/S ratio of 0.83. This compares to its industry’s average P/S of 1.11.

Finally, investors should note that ALL has a P/CF ratio of 10.91. This figure highlights a company’s operating cash flow and can be used to find firms that are undervalued when considering their impressive cash outlook. ALL’s current P/CF looks attractive when compared to its industry’s average P/CF of 13.41. Over the past year, ALL’s P/CF has been as high as 11.94 and as low as 6.08, with a median of 10.56.

Value investors will likely look at more than just these metrics, but the above data helps show that Allstate is likely undervalued currently. And when considering the strength of its earnings outlook, ALL sticks out at as one of the market’s strongest value stocks.


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Zacks Investment Research
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