Investors with an interest in Insurance - Multi line stocks have likely encountered both MGIC Investment (MTG) and Zurich Insurance Group Ltd. (ZURVY). But which of these two stocks presents investors with the better value opportunity right now? 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.
MGIC Investment has a Zacks Rank of #2 (Buy), while Zurich Insurance Group Ltd. has a Zacks Rank of #4 (Sell) right now. This means that MTG'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.
MTG currently has a forward P/E ratio of 9.18, while ZURVY has a forward P/E of 16.01. We also note that MTG has a PEG ratio of 1.47. 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. ZURVY currently has a PEG ratio of 1.70.
Another notable valuation metric for MTG is its P/B ratio of 1.22. 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, ZURVY has a P/B of 3.86.
Based on these metrics and many more, MTG holds a Value grade of B, while ZURVY has a Value grade of C.
MTG 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 MTG is likely 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.
