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AFG vs. PGR: Which Stock Is the Better Value Option?

Zacks Equity Research
Mutual Fund Report for PGOFX

Investors interested in Insurance - Property and Casualty stocks are likely familiar with American Financial Group (AFG) and Progressive (PGR). But which of these two companies is the best option for those looking for undervalued stocks? Let's take a closer look.

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 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, American Financial Group has a Zacks Rank of #2 (Buy), while Progressive has a Zacks Rank of #3 (Hold). Investors should feel comfortable knowing that AFG likely has seen a stronger improvement to its earnings outlook than PGR has recently. 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.

AFG currently has a forward P/E ratio of 13.07, while PGR has a forward P/E of 15.69. We also note that AFG has a PEG ratio of 1.06. 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. PGR currently has a PEG ratio of 2.14.

Another notable valuation metric for AFG is its P/B ratio of 1.95. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. By comparison, PGR has a P/B of 3.95.

These metrics, and several others, help AFG earn a Value grade of A, while PGR has been given a Value grade of C.

AFG 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 AFG is likely the superior value option right now.


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American Financial Group, Inc. (AFG) : Free Stock Analysis Report
 
The Progressive Corporation (PGR) : Free Stock Analysis Report
 
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