Investors with an interest in Insurance - Life Insurance stocks have likely encountered both Manulife Financial (MFC) and Sun Life (SLF). 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.
There are plenty of strategies for discovering value stocks, but we have found that pairing a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system produces the best returns. 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.
Right now, Manulife Financial is sporting a Zacks Rank of #2 (Buy), while Sun Life has a Zacks Rank of #3 (Hold). The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that MFC has an improving earnings outlook. But this is just one piece of the puzzle for value investors.
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.
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.
MFC currently has a forward P/E ratio of 10.43, while SLF has a forward P/E of 11.90. We also note that MFC has a PEG ratio of 1.04. 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. SLF currently has a PEG ratio of 1.70.
Another notable valuation metric for MFC is its P/B ratio of 1.63. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. By comparison, SLF has a P/B of 2.34.
Based on these metrics and many more, MFC holds a Value grade of A, while SLF has a Value grade of C.
MFC stands above SLF thanks to its solid earnings outlook, and based on these valuation figures, we also feel that MFC is the superior value option right now.
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Sun Life Financial Inc. (SLF) : 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.
