Investors interested in Insurance – Property and Casualty stocks are likely familiar with Allstate (ALL) and W.R. Berkley (WRB). But which of these two companies is the best option for those looking for undervalued stocks? 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 puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Right now, both Allstate and W.R. Berkley are sporting a Zacks Rank of # 2 (Buy). This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that these stocks have improving earnings outlooks. However, value investors will care about much more than just this.
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.
Our Value category highlights undervalued companies by looking at a variety of key metrics, including the popular P/E ratio, as well as the P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that have been used by value investors for years.
ALL currently has a forward P/E ratio of 11.34, while WRB has a forward P/E of 25.39. We also note that ALL has a PEG ratio of 1.36. 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. WRB currently has a PEG ratio of 2.82.
Another notable valuation metric for ALL is its P/B ratio of 1.58. 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, WRB has a P/B of 2.21.
Based on these metrics and many more, ALL holds a Value grade of A, while WRB has a Value grade of C.
Both ALL and WRB are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that ALL is the superior value option right now.
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