Should Value Investors Buy Unum Group (UNM) Stock?
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, 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 fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.
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.
Unum Group (UNM) is a stock many investors are watching right now. UNM is currently sporting a Zacks Rank of #2 (Buy), as well as a Value grade of A. The stock is trading with P/E ratio of 5.67 right now. For comparison, its industry sports an average P/E of 9.86. UNM’s Forward P/E has been as high as 7.46 and as low as 5.49, with a median of 6.54, all within the past year.
Investors should also note that UNM holds a PEG ratio of 0.84. 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. UNM’s industry currently sports an average PEG of 1.71. UNM’s PEG has been as high as 1.03 and as low as 0.42, with a median of 0.54, all within the past year.
Another valuation metric that we should highlight is UNM’s P/B ratio of 0.82. The P/B ratio pits a stock’s market value against its book value, which is defined as total assets minus total liabilities. UNM’s current P/B looks attractive when compared to its industry’s average P/B of 1.43. Over the past year, UNM’s P/B has been as high as 1.06 and as low as 0.49, with a median of 0.82.
Value investors also love the P/S ratio, which is calculated by simply dividing a stock’s price with the company’s sales. This is a prefered metric because revenue can’t really be manipulated, so sales are often a truer performance indicator. UNM has a P/S ratio of 0.63. This compares to its industry’s average P/S of 1.79.
Finally, investors should note that UNM has a P/CF ratio of 5. 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. UNM’s current P/CF looks attractive when compared to its industry’s average P/CF of 6.48. UNM’s P/CF has been as high as 6.63 and as low as 4.67, with a median of 5.70, all within the past year.
Value investors will likely look at more than just these metrics, but the above data helps show that Unum Group is likely undervalued currently. And when considering the strength of its earnings outlook, UNM sticks out at as one of the market’s strongest value stocks.
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