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Investors interested in stocks from the Insurance - Property and Casualty sector have probably already heard of Allstate (ALL) and Selective Insurance (SIGI). But which of these two companies is the best option for those looking for undervalued stocks? Let's take a closer look.
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 proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
Allstate has a Zacks Rank of #2 (Buy), while Selective Insurance has a Zacks Rank of #4 (Sell) right now. The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that ALL has an improving earnings outlook. But this is just one piece of the puzzle for value investors.
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 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.
ALL currently has a forward P/E ratio of 8.69, while SIGI has a forward P/E of 16.12. We also note that ALL has a PEG ratio of 1.16. 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. SIGI currently has a PEG ratio of 9.54.
Another notable valuation metric for ALL is its P/B ratio of 1.38. 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, SIGI has a P/B of 1.57.
These metrics, and several others, help ALL earn a Value grade of A, while SIGI has been given a Value grade of D.
ALL sticks out from SIGI in both our Zacks Rank and Style Scores models, so value investors will likely feel that ALL is the better option right now.
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The Allstate Corporation (ALL) : Free Stock Analysis Report
Selective Insurance Group, Inc. (SIGI) : Free Stock Analysis Report
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