Yahoo Finance Are Investors Undervaluing First American Financial (FAF) 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 latest value, growth, and momentum trends to underscore strong picks.
Of these, perhaps no stock market trend is more popular than value investing, which is a strategy that has proven to be successful in all sorts of market environments. Value investors use tried-and-true metrics and fundamental analysis to find companies that they believe are undervalued at their current share price levels.
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 First American Financial (FAF). FAF is currently holding a Zacks Rank of #2 (Buy) and a Value grade of A. The stock has a Forward P/E ratio of 10.15. This compares to its industry's average Forward P/E of 25.76. Over the past 52 weeks, FAF's Forward P/E has been as high as 12.45 and as low as 6.85, with a median of 8.83.
Another valuation metric that we should highlight is FAF's P/B ratio of 1.35. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. This stock's P/B looks solid versus its industry's average P/B of 1.57. Over the past 12 months, FAF's P/B has been as high as 1.53 and as low as 0.95, with a median of 1.20.
Value investors also love the P/S ratio, which is calculated by simply dividing a stock's price with the company's sales. Some people prefer this metric because sales are harder to manipulate on an income statement. This means it could be a truer performance indicator. FAF has a P/S ratio of 0.74. This compares to its industry's average P/S of 0.93.
Investors could also keep in mind Mercury General (MCY), an Insurance - Property and Casualty stock with a Zacks Rank of # 2 (Buy) and Value grade of A.
Mercury General also has a P/B ratio of 1.28 compared to its industry's price-to-book ratio of 1.57. Over the past year, its P/B ratio has been as high as 1.63, as low as 0.97, with a median of 1.35.
These are only a few of the key metrics included in First American Financial and Mercury General strong Value grade, but they help show that the stocks are likely undervalued right now. When factoring in the strength of its earnings outlook, FAF and MCY look like an impressive value stock at the moment.
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First American Financial Corporation (FAF) : Free Stock Analysis Report
Mercury General Corporation (MCY) : Free Stock Analysis Report
