Investors interested in Insurance - Property and Casualty stocks are likely familiar with American Financial Group (AFG) and W.R. Berkley (WRB). But which of these two stocks presents investors with the better value opportunity right now? 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, both American Financial Group and W.R. Berkley are sporting a Zacks Rank of # 2 (Buy). This means that both companies have witnessed positive earnings estimate revisions, so investors should feel comfortable knowing that both of these stocks have an improving earnings outlook. But this is just one piece of the puzzle for value investors.
Value investors analyze a variety of traditional, tried-and-true metrics to help find companies that they believe are undervalued at their current share price levels.
The Style Score Value grade factors in a variety of key fundamental metrics, including the popular P/E ratio, P/S ratio, earnings yield, cash flow per share, and a number of other key stats that are commonly used by value investors.
AFG currently has a forward P/E ratio of 11.78, while WRB has a forward P/E of 24.89. We also note that AFG has a PEG ratio of 1.93. 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 2.77.
Another notable valuation metric for AFG is its P/B ratio of 1.62. The P/B ratio is used to compare a stock's market value with its book value, which is defined as total assets minus total liabilities. For comparison, WRB has a P/B of 2.13.
Based on these metrics and many more, AFG holds a Value grade of B, while WRB has a Value grade of D.
Both AFG and WRB are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that AFG is the superior value 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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