Will AXA (AXAHY) Prove to be a Suitable Value Pick?

Value investing is easily one of the most popular ways to find great stocks in any market environment. After all, who wouldn’t want to find stocks that are either flying under the radar and are compelling buys, or offer up tantalizing discounts when compared to fair value?

One way to find these companies is by looking at several key metrics and financial ratios, many of which are crucial in the value stock selection process. Let’s put AXA S.A. AXAHY stock into this equation and find out if it is a good choice for value-oriented investors right now, or if investors subscribing to this methodology should look elsewhere for top picks:

PE Ratio

A key metric that value investors always look at is the Price to Earnings Ratio, or PE for short. This shows us how much investors are willing to pay for each dollar of earnings in a given stock, and is easily one of the most popular financial ratios in the world. The best use of the PE ratio is to compare the stock’s current PE ratio with: a) where this ratio has been in the past; b) how it compares to the average for the industry/sector; and c) how it compares to the market as a whole.

On this front, AXA has a trailing twelve months PE ratio of 11.66. This level compares pretty favorably with the market at large, as the PE ratio for the S&P 500 comes in at about 20.50.



If we focus on the long-term trend of the stock the current level puts AXA’s current PE among its highs over the observed period, with the number having risen rapidly over the past few months. This suggests that the stock is overvalued compared to its own historical levels.

Further, the stock’s PE compares favorably with the Zacks classified Insurance – Multi Line industry’s trailing twelve months PE ratio, which stands at 13.29. At the very least, this indicates that the stock is relatively undervalued right now, compared to its peers.



We should also point out that AXA has a forward PE ratio (price relative to this year’s earnings) of just 10.25 – which is lower than the current level. So it is fair to say that a slightly more value-oriented path may be ahead for AXA stock in the near term too.

PS Ratio

Another key metric to note is the Price/Sales ratio. This approach compares a given stock’s price to its total sales, where a lower reading is generally considered better. Some people like this metric more than other value-focused ones because it looks at sales, something that is far harder to manipulate with accounting tricks than earnings.

Right now, AXA has a P/S ratio of about 0.63. This is lower than the Zacks categorized Insurance – Multi Line industry average, which comes in at 1.34 right now.