CNA vs. BRK.B: Which Stock Should Value Investors Buy Now?
Investors interested in Insurance - Property and Casualty stocks are likely familiar with CNA Financial (CNA) and Berkshire Hathaway B (BRK.B). But which of these two companies is the best option for those looking for undervalued stocks? Let's take a closer look.
The best way to find great value stocks is to pair a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system. The proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
CNA Financial has a Zacks Rank of #2 (Buy), while Berkshire Hathaway B has a Zacks Rank of #3 (Hold) right now. This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that CNA 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.
The Value category of the Style Scores system identifies undervalued companies by looking at a number of key metrics. These include the long-favored P/E ratio, P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that help us determine a company's fair value.
CNA currently has a forward P/E ratio of 9.20, while BRK.B has a forward P/E of 21.58. We also note that CNA has a PEG ratio of 1.84. 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 3.08.
Another notable valuation metric for CNA is its P/B ratio of 1.28. 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, BRK.B has a P/B of 1.35.
Based on these metrics and many more, CNA holds a Value grade of A, while BRK.B has a Value grade of D.
CNA stands above BRK.B thanks to its solid earnings outlook, and based on these valuation figures, we also feel that CNA is the superior value option right now.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
CNA Financial Corporation (CNA) : Free Stock Analysis Report
Berkshire Hathaway Inc. (BRK.B) : Free Stock Analysis Report
