Are Investors Undervaluing Manulife Financial (MFC) Right Now?

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.

Looking at the history of these trends, perhaps none is more beloved than value investing. This strategy simply looks to identify companies that are being undervalued by the broader 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.

Manulife Financial (MFC) is a stock many investors are watching right now. MFC is currently holding a Zacks Rank of #2 (Buy) and a Value grade of A.

Another valuation metric that we should highlight is MFC's P/B ratio of 1.12. 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 attractive against its industry's average P/B of 1.48. Over the past 12 months, MFC's P/B has been as high as 1.18 and as low as 0.57, with a median of 0.83.

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. MFC has a P/S ratio of 0.7. This compares to its industry's average P/S of 0.83.

Finally, we should also recognize that MFC has a P/CF ratio of 14.07. 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. MFC's P/CF compares to its industry's average P/CF of 14.56. Over the past 52 weeks, MFC's P/CF has been as high as 14.80 and as low as 6.37, with a median of 10.75.

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

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