Investors interested in stocks from the Insurance – Property and Casualty sector have probably already heard of Allstate (ALL) and Infinity Property and Casualty (IPCC). But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.
Everyone has their own methods for finding great value opportunities, but our model includes pairing an impressive grade in the Value category of our Style Scores system with a strong Zacks Rank. The proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
Allstate and Infinity Property and Casualty are both sporting a Zacks Rank of #2 (Buy) right now. The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that both of these companies have improving earnings outlooks. However, value investors will care about much more than just this.
Value investors also tend to look at a number of traditional, tried-and-true figures to help them find stocks that they believe are undervalued at their current share price levels.
The Style Score Value grade factors in a variety of key fundamental metrics, including the popular P/E ratio, P/S ratio, earnings yield, cash flow per share, and a number of other key stats that are commonly used by value investors.
ALL currently has a forward P/E ratio of 10.63, while IPCC has a forward P/E of 23.61. We also note that ALL has a PEG ratio of 1.28. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. IPCC currently has a PEG ratio of 2.62.
Another notable valuation metric for ALL is its P/B ratio of 1.58. 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. By comparison, IPCC has a P/B of 2.20.
These metrics, and several others, help ALL earn a Value grade of A, while IPCC has been given a Value grade of C.
Both ALL and IPCC are impressive stocks with a solid earnings outlook, but based on these valuation figures, we feel that ALL is the superior value option right now.
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