Should Value Investors Buy Magnite (MGNI) 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.

One company to watch right now is Magnite (MGNI). MGNI is currently sporting a Zacks Rank #2 (Buy), as well as a Value grade of A. The stock is trading with a P/E ratio of 24.38, which compares to its industry's average of 26.88. MGNI's Forward P/E has been as high as 26.73 and as low as 9.54, with a median of 17.74, all within the past year.

Investors should also note that MGNI holds a PEG ratio of 0.81. 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. MGNI's PEG compares to its industry's average PEG of 0.94. Within the past year, MGNI's PEG has been as high as 0.92 and as low as 0.32, with a median of 0.50.

Value investors also use the P/S ratio. The P/S ratio is calculated as price divided by sales. This is a preferred metric because revenue can't really be manipulated, so sales are often a truer performance indicator. MGNI has a P/S ratio of 2.43. This compares to its industry's average P/S of 2.78.

These figures are just a handful of the metrics value investors tend to look at, but they help show that Magnite is likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, MGNI feels like a great value stock at the moment.

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This article originally published on Zacks Investment Research (zacks.com).

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