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Is Dynex Capital (DX) Stock Undervalued Right Now?

Zacks Equity Research

Here at Zacks, our focus is on the proven Zacks Rank system, which emphasizes earnings estimates and estimate revisions to find great stocks. Nevertheless, we are always paying attention to the latest value, growth, and momentum trends to underscore strong picks.

Considering these trends, value investing is clearly one of the most preferred ways to find strong stocks in any type of market. Value investors use tried-and-true metrics and fundamental analysis to find companies that they believe are undervalued at their current share price levels.

On top of the Zacks Rank, investors can also look at our innovative Style Scores system to find stocks with specific traits. For example, value investors will want to focus on the "Value" category. Stocks with high Zacks Ranks and "A" grades for Value will be some of the highest-quality value stocks on the market today.

One company value investors might notice is Dynex Capital (DX). DX is currently sporting a Zacks Rank of #2 (Buy) and an A for Value. The stock is trading with a P/E ratio of 9.11, which compares to its industry's average of 9.81. Over the last 12 months, DX's Forward P/E has been as high as 9.12 and as low as 7.66, with a median of 8.47.

We should also highlight that DX has a P/B ratio of 0.99. The P/B is a method of comparing a stock's market value to 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 1.28. Over the past year, DX's P/B has been as high as 1.02 and as low as 0.79, with a median of 0.94.

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. DX has a P/S ratio of 2.41. This compares to its industry's average P/S of 3.15.

These are only a few of the key metrics included in Dynex Capital's strong Value grade, but they help show that the stock is likely undervalued right now. When factoring in the strength of its earnings outlook, DX looks like an impressive value stock at the moment.


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