Should Value Investors Buy American Financial Group (AFG) Stock?

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 tried-and-true metrics and fundamental analysis to find companies that they believe are undervalued at their current share price levels.

Zacks has developed the innovative Style Scores system to highlight stocks with specific traits. For example, value investors will be interested in stocks with great grades in the "Value" category. When paired with a high Zacks Rank, "A" grades in the Value category are among the strongest value stocks on the market today.

American Financial Group (AFG) is a stock many investors are watching right now. AFG is currently holding a Zacks Rank of #2 (Buy) and a Value grade of A. The stock is trading with P/E ratio of 12.55 right now. For comparison, its industry sports an average P/E of 27.14. Over the past 52 weeks, AFG's Forward P/E has been as high as 1,155.88 and as low as 10.14, with a median of 12.99.

Finally, investors will want to recognize that AFG has a P/CF ratio of 11.71. This data point considers a firm's operating cash flow and is frequently used to find companies that are undervalued when considering their solid cash outlook. This stock's P/CF looks attractive against its industry's average P/CF of 27.64. AFG's P/CF has been as high as 11.71 and as low as 4.43, with a median of 6.06, all within the past year.

If you're looking for another solid Insurance - Property and Casualty value stock, take a look at Mercury General (MCY). MCY is a # 1 (Strong Buy) stock with a Value score of A.

Furthermore, Mercury General holds a P/B ratio of 1.25 and its industry's price-to-book ratio is 1.49. MCY's P/B has been as high as 1.63, as low as 0.97, with a median of 1.37 over the past 12 months.

These figures are just a handful of the metrics value investors tend to look at, but they help show that American Financial Group and Mercury General are likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, AFG and MCY feels like a great value stock at the moment.

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American Financial Group, Inc. (AFG) : Free Stock Analysis Report
 
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