Investors interested in Insurance - Property and Casualty stocks are likely familiar with Arch Capital Group (ACGL) and W.R. Berkley (WRB). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.
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 proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
Currently, Arch Capital Group has a Zacks Rank of #2 (Buy), while W.R. Berkley has a Zacks Rank of #3 (Hold). This means that ACGL'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 are also interested in a number of tried-and-true valuation metrics that help show when a company is undervalued at its current share price levels.
Our Value category grades stocks based on a number of key metrics, including the tried-and-true P/E ratio, the P/S ratio, earnings yield, and cash flow per share, as well as a variety of other fundamentals that value investors frequently use.
ACGL currently has a forward P/E ratio of 12.64, while WRB has a forward P/E of 21.45. We also note that ACGL has a PEG ratio of 1.15. 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. WRB currently has a PEG ratio of 2.38.
Another notable valuation metric for ACGL is its P/B ratio of 1.37. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. For comparison, WRB has a P/B of 1.81.
These are just a few of the metrics contributing to ACGL's Value grade of B and WRB's Value grade of C.
ACGL sticks out from WRB in both our Zacks Rank and Style Scores models, so value investors will likely feel that ACGL is the better option right now.
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Arch Capital Group Ltd. (ACGL) : Free Stock Analysis Report
W.R. Berkley Corporation (WRB) : Free Stock Analysis Report
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