Investors interested in Insurance - Property and Casualty stocks are likely familiar with CNA Financial (CNA) and Cincinnati Financial (CINF). 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 Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
Both CNA Financial and Cincinnati Financial have 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. But this is just one factor that value investors are interested in.
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.
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.
CNA currently has a forward P/E ratio of 10.77, while CINF has a forward P/E of 25.84. We also note that CNA has a PEG ratio of 4.32. 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. CINF currently has a PEG ratio of 7.43.
Another notable valuation metric for CNA is its P/B ratio of 1.2. 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, CINF has a P/B of 1.64.
These metrics, and several others, help CNA earn a Value grade of A, while CINF has been given a Value grade of C.
Both CNA and CINF are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that CNA is the superior value option right now.
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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.
