Investors interested in Insurance - Property and Casualty stocks are likely familiar with RenaissanceRe (RNR) 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.
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 proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
Currently, RenaissanceRe has a Zacks Rank of #1 (Strong Buy), while Cincinnati Financial has a Zacks Rank of #3 (Hold). This means that RNR's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. However, value investors will care about much more than just this.
Value investors also try to analyze a wide range of traditional figures and metrics to help determine whether a company is undervalued at its current share price levels.
The Value category of the Style Scores system identifies undervalued companies by looking at a number of key metrics. These include the long-favored P/E ratio, P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that help us determine a company's fair value.
RNR currently has a forward P/E ratio of 7.87, while CINF has a forward P/E of 22.95. We also note that RNR has a PEG ratio of 1.60. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. CINF currently has a PEG ratio of 4.33.
Another notable valuation metric for RNR is its P/B ratio of 1.17. 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, CINF has a P/B of 1.68.
These metrics, and several others, help RNR earn a Value grade of B, while CINF has been given a Value grade of C.
RNR has seen stronger estimate revision activity and sports more attractive valuation metrics than CINF, so it seems like value investors will conclude that RNR is the superior option right now.
5 Stocks Set to Double
Each was handpicked by a Zacks expert as the #1 favorite stock to gain +100% or more in the coming year. While not all picks can be winners, previous recommendations have soared +112%, +171%, +209% and +232%.
Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.
Today, See These 5 Potential Home Runs >>RenaissanceRe Holdings Ltd. (RNR) : Free Stock Analysis Report
Cincinnati Financial Corporation (CINF) : 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.
