Investors interested in stocks from the Insurance – Property and Casualty sector have probably already heard of Everest Re (RE) and RenaissanceRe (RNR). But which of these two stocks offers value investors a better bang for their buck right now? We'll need to take a closer look.
We have found that the best way to discover great value opportunities is to pair a strong Zacks Rank with a great grade in the Value category of our Style Scores system. The Zacks Rank is a proven strategy that targets companies with positive earnings estimate revision trends, while our Style Scores work to grade companies based on specific traits.
Everest Re and RenaissanceRe are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that RE is likely seeing its earnings outlook improve to a greater extent. But this is just one piece of the puzzle for value investors.
Value investors also try to analyze a wide range of traditional figures and metrics to help determine whether a company is undervalued at its 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.
RE currently has a forward P/E ratio of 11.32, while RNR has a forward P/E of 11.39. We also note that RE has a PEG ratio of 1.13. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. RNR currently has a PEG ratio of 1.20.
Another notable valuation metric for RE is its P/B ratio of 1.13. 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. By comparison, RNR has a P/B of 1.21.
These metrics, and several others, help RE earn a Value grade of A, while RNR has been given a Value grade of C.
RE has seen stronger estimate revision activity and sports more attractive valuation metrics than RNR, so it seems like value investors will conclude that RE is the superior option right now.
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