ACGL vs. PGR: Which Stock Is the Better Value Option?
Investors interested in Insurance - Property and Casualty stocks are likely familiar with Arch Capital Group (ACGL) and Progressive (PGR). But which of these two stocks presents investors with the better value opportunity right now? Let's 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.
Currently, both Arch Capital Group and Progressive are holding a Zacks Rank of # 2 (Buy). This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that these stocks have improving earnings outlooks. But this is just one piece of the puzzle for value investors.
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.
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.
ACGL currently has a forward P/E ratio of 12.14, while PGR has a forward P/E of 31.66. We also note that ACGL has a PEG ratio of 1.21. 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. PGR currently has a PEG ratio of 1.27.
Another notable valuation metric for ACGL is its P/B ratio of 2.27. 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, PGR has a P/B of 5.21.
These are just a few of the metrics contributing to ACGL's Value grade of B and PGR's Value grade of C.
Both ACGL and PGR are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that ACGL is the superior value option right now.
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Arch Capital Group Ltd. (ACGL) : Free Stock Analysis Report
The Progressive Corporation (PGR) : Free Stock Analysis Report
