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Are Investors Undervaluing Aflac (AFL) 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 rely on traditional forms of analysis on key valuation metrics to find stocks that they believe are undervalued, leaving room for profits.

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.

One stock to keep an eye on is Aflac (AFL). AFL is currently holding a Zacks Rank of #2 (Buy) and a Value grade of A. The stock is trading with P/E ratio of 7.07 right now. For comparison, its industry sports an average P/E of 10.55. Over the past year, AFL's Forward P/E has been as high as 12.96 and as low as 5.63, with a median of 11.79.

Another valuation metric that we should highlight is AFL's P/B ratio of 0.81. The P/B ratio is used to compare a stock's market value with 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 1.15. AFL's P/B has been as high as 1.58 and as low as 0.64, with a median of 1.35, over the past year.

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. AFL has a P/S ratio of 1.05. This compares to its industry's average P/S of 1.22.

Finally, investors should note that AFL has a P/CF ratio of 5.12. 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. AFL's P/CF compares to its industry's average P/CF of 8.07. Within the past 12 months, AFL's P/CF has been as high as 9.70 and as low as 4.06, with a median of 8.85.

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

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