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CNA or BRK.B: Which Is the Better Value Stock Right Now?

Zacks Equity Research

Investors looking for stocks in the Insurance - Property and Casualty sector might want to consider either CNA Financial (CNA) or Berkshire Hathaway Inc. (BRK.B). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.

Everyone has their own methods for finding great value opportunities, but our model includes pairing an impressive grade in the Value category of our Style Scores system with a strong Zacks Rank. 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, CNA Financial has a Zacks Rank of #2 (Buy), while Berkshire Hathaway Inc. has a Zacks Rank of #4 (Sell). The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that CNA has an improving earnings outlook. However, value investors will care about much more than just this.

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 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.

CNA currently has a forward P/E ratio of 11.08, while BRK.B has a forward P/E of 19.10. We also note that CNA has a PEG ratio of 2.22. 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. BRK.B currently has a PEG ratio of 2.73.

Another notable valuation metric for CNA is its P/B ratio of 1.04. 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, BRK.B has a P/B of 1.26.

Based on these metrics and many more, CNA holds a Value grade of B, while BRK.B has a Value grade of D.

CNA sticks out from BRK.B in both our Zacks Rank and Style Scores models, so value investors will likely feel that CNA is the better option right now.


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