Should Value Investors Buy New Residential Investment (NRZ) 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.
Considering these trends, value investing is clearly one of the most preferred ways to find strong stocks in any type of 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.
Luckily, Zacks has developed its own Style Scores system in an effort to find stocks with specific traits. Value investors will be interested in the system's "Value" category. Stocks with both "A" grades in the Value category and high Zacks Ranks are among the strongest value stocks on the market right now.
One stock to keep an eye on is New Residential Investment (NRZ). NRZ is currently sporting a Zacks Rank of #2 (Buy), as well as an A grade for Value. The stock is trading with a P/E ratio of 6.79, which compares to its industry's average of 10.56. Over the past year, NRZ's Forward P/E has been as high as 12.97 and as low as 1.56, with a median of 6.18.
Another valuation metric that we should highlight is NRZ's P/B ratio of 0.88. Investors use the P/B ratio to look at a stock's market value versus 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 0.93. Over the past year, NRZ's P/B has been as high as 1.08 and as low as 0.28, with a median of 0.73.
These figures are just a handful of the metrics value investors tend to look at, but they help show that New Residential Investment is likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, NRZ feels like a great value stock at the moment.
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