Investors with an interest in Insurance - Property and Casualty stocks have likely encountered both American Financial Group (AFG) and W.R. Berkley (WRB). 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 favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
Right now, American Financial Group is sporting a Zacks Rank of #2 (Buy), while W.R. Berkley has a Zacks Rank of #3 (Hold). This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that AFG is likely seeing its earnings outlook improve to a greater extent. But this is just one factor that value investors are interested in.
Value investors also tend to look at a number of traditional, tried-and-true figures to help them find stocks 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.
AFG currently has a forward P/E ratio of 9.66, while WRB has a forward P/E of 21.08. We also note that AFG has a PEG ratio of 1.49. 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. WRB currently has a PEG ratio of 2.34.
Another notable valuation metric for AFG is its P/B ratio of 1.25. 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, WRB has a P/B of 1.89.
These are just a few of the metrics contributing to AFG's Value grade of B and WRB's Value grade of D.
AFG sticks out from WRB in both our Zacks Rank and Style Scores models, so value investors will likely feel that AFG is the better option right now.
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American Financial Group, Inc. (AFG) : Free Stock Analysis Report
W.R. Berkley Corporation (WRB) : Free Stock Analysis Report
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