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.
New Residential Investment (NRZ) is a stock many investors are watching right now. NRZ is currently holding a Zacks Rank of #2 (Buy) and a Value grade of A. The stock is trading with a P/E ratio of 5.15, which compares to its industry's average of 9.21. NRZ's Forward P/E has been as high as 12.97 and as low as 1.56, with a median of 6.95, all within the past year.
We should also highlight that NRZ has a P/B ratio of 0.60. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. This company's current P/B looks solid when compared to its industry's average P/B of 0.93. Within the past 52 weeks, NRZ's P/B has been as high as 1.08 and as low as 0.28, with a median of 0.93.
Value investors also frequently use the P/S ratio. This metric is found by dividing a stock's price with the company's revenue. This is a popular metric because sales are harder to manipulate on an income statement, so they are often considered a better performance indicator. NRZ has a P/S ratio of 1.64. This compares to its industry's average P/S of 1.67.
Value investors will likely look at more than just these metrics, but the above data helps show that New Residential Investment is likely undervalued currently. And when considering the strength of its earnings outlook, NRZ sticks out at as one of the market's strongest value stocks.
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