Investors interested in stocks from the Insurance – Property and Casualty sector have probably already heard of American Financial Group (AFG) and ProSight Global, Inc. (PROS). But which of these two stocks is more attractive to value investors? We’ll need to take a closer look to find out.
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 favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
Right now, American Financial Group is sporting a Zacks Rank of #2 (Buy), while ProSight Global, Inc. has a Zacks Rank of #3 (Hold). This means that AFG’s earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. But this is only part of the picture for value investors.
Value investors analyze a variety of traditional, tried-and-true metrics to help find companies that they believe are undervalued at their 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.
AFG currently has a forward P/E ratio of 12.43, while PROS has a forward P/E of 13.54. We also note that AFG has a PEG ratio of 2.02. 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. PROS currently has a PEG ratio of 2.95.
Another notable valuation metric for AFG is its P/B ratio of 1.58. The P/B ratio is used to compare a stock’s market value with its book value, which is defined as total assets minus total liabilities. For comparison, PROS has a P/B of 1.69.
These metrics, and several others, help AFG earn a Value grade of A, while PROS has been given a Value grade of C.
AFG is currently sporting an improving earnings outlook, which makes it stick out in our Zacks Rank model. And, based on the above valuation metrics, we feel that AFG is likely the superior value option right now.
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