Investors interested in stocks from the Insurance - Property and Casualty sector have probably already heard of Selective Insurance (SIGI) and Progressive (PGR). 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 Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
Currently, Selective Insurance has a Zacks Rank of #2 (Buy), while Progressive 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 SIGI is likely seeing its earnings outlook improve to a greater extent. But this is just one piece of the puzzle for value investors.
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 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.
SIGI currently has a forward P/E ratio of 14.06, while PGR has a forward P/E of 20.37. We also note that SIGI has a PEG ratio of 0.74. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. PGR currently has a PEG ratio of 0.86.
Another notable valuation metric for SIGI is its P/B ratio of 2.39. 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, PGR has a P/B of 5.13.
Based on these metrics and many more, SIGI holds a Value grade of B, while PGR has a Value grade of C.
SIGI is currently sporting an improving earnings outlook, which makes it stick out in our Zacks Rank model. And, based on the above valuation metrics, we feel that SIGI is likely the superior value option right now.
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