Investors looking for stocks in the Insurance - Property and Casualty sector might want to consider either Allstate (ALL) or W.R. Berkley (WRB). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.
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, Allstate is sporting a Zacks Rank of #2 (Buy), while W.R. Berkley has a Zacks Rank of #4 (Sell). This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that ALL is likely seeing its earnings outlook improve to a greater extent. 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.
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 9.78, while WRB has a forward P/E of 18.00. We also note that ALL has a PEG ratio of 0.83. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. WRB currently has a PEG ratio of 2.63.
Another notable valuation metric for ALL is its P/B ratio of 2.53. 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 3.1.
Based on these metrics and many more, ALL holds a Value grade of A, while WRB has a Value grade of C.
ALL stands above WRB thanks to its solid earnings outlook, and based on these valuation figures, we also feel that ALL is the superior value option right now.
7 Best Stocks for the Next 30 Days
Just released: Experts distill 7 elite stocks from the current list of 220 Zacks Rank #1 Strong Buys. They deem these tickers "Most Likely for Early Price Pops."
Since 1988, the full list has beaten the market more than 2X over with an average gain of +23.5% per year. So be sure to give these hand picked 7 your immediate attention.
See them now >>The Allstate Corporation (ALL) : Free Stock Analysis Report
W.R. Berkley Corporation (WRB) : Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
