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Value investing is easily one of the most popular ways to find great stocks in any market environment. After all, who wouldn’t want to find stocks that are either flying under the radar and are compelling buys, or offer up tantalizing discounts when compared to fair value?
One way to find these companies is by looking at several key metrics and financial ratios, many of which are crucial in the value stock selection process. Let’s put CNA Financial Corporation (CNA - Free Report) stock into this equation and find out if it is a good choice for value-oriented investors right now, or if investors subscribing to this methodology should look elsewhere for top picks:
PE Ratio
A key metric that value investors always look at is the Price to Earnings Ratio, or PE for short. This shows us how much investors are willing to pay for each dollar of earnings in a given stock, and is easily one of the most popular financial ratios in the world. The best use of the PE ratio is to compare the stock’s current PE ratio with: a) where this ratio has been in the past; b) how it compares to the average for the industry/sector; and c) how it compares to the market as a whole.
On this front, CNA Financial has a trailing twelve months PE ratio of 18.11, as you can see in the chart below:
This level actually compares pretty favorably with the market at large, as the PE for the S&P 500 compares in at about 19.50. If we focus on the stock’s long-term PE trend, the current level puts CNA Financial’s current PE ratio above its midpoint over the past five years, with the number having risen rapidly lately.
Further, the stock’s PE also compares favorably with the Zacks classified Insurance-Property & Casualty industry’s trailing twelve months PE ratio, which stands at 19.87. At the very least, this indicates that the stock is relatively undervalued right now, compared to its peers.
We should also point out that CNA Financial has a forward PE ratio (price relative to this year’s earnings) of just 13.24, so it is fair to say that a slightly more value-oriented path may be ahead for CNA Financial stock in the near term too.
P/S Ratio
Another key metric to note is the Price/Sales ratio. This approach compares a given stock’s price to its total sales, where a lower reading is generally considered better. Some people like this metric more than other value-focused ones because it looks at sales, something that is far harder to manipulate with accounting tricks than earnings.
Right now, CNA Financial has a P/S ratio of about 1.24. This is lower than the S&P 500 average, which comes in at 3 right now.
PEG Ratio
While earnings are certainly important, it is essential to know how much you are paying for the growth of earnings as well. One can easily do that with the PEG ratio (ratio of the P/E to the expected future earnings growth rate).The PEG ratio gives a more complete picture of the valuation of a stock than the P/E ratio.
CNA Financial’s PEG ratio stands at just 2.63, compared with the Zacks Insurance-Property & Casualty industry average of 3.12. This suggests a decent undervalued trading relative to its earnings growth potential right now.
Broad Value Outlook
In aggregate, CNA Financial currently has a Zacks Value Style Score of ‘B’, putting it into the top 40% of all stocks we cover from this look. This makes CNA Financial a solid choice for value investors.
What About the Stock Overall?
Though CNA Financial might be a good choice for value investors, there are plenty of other factors to consider before investing in this name. In particular, it is worth noting that the company has a Growth grade of ‘B’ and a Momentum score of ‘C’. This gives CNA a Zacks VGM score—or its overarching fundamental grade—of ‘B’. (You can read more about the Zacks Style Scores here >>)
Meanwhile, the company’s recent earnings estimates have been rising. The current quarter has seen one estimate go higher in the past sixty days compared to two lower, while the full year estimate has three eight up and one down in the same time period.
This has had a positive impact on the consensus estimate though as the current quarter consensus estimate has risen by 2.6% in the past two months, while the full year estimate has inched up by 0.6%. You can see the consensus estimate trend and recent price action for the stock in the chart below:
This positive trend is why the stock has a Zacks Rank #2 (Buy) and why we are looking for in-line performance from the company in the near term.
Bottom Line
CNA Financial is an inspired choice for value investors, as it is hard to beat its incredible lineup of statistics on this front. Moreover, a strong industry rank (Top 25% compared to over 250 industries) further underlines the potential of the company overall. In fact, over the past two years, the Zacks Insurance-Property & Casualty industry has clearly outperformed the broader market, as you can see below:
With all factors being positive along with a Zacks Rank #2, it is difficult to not get excited about this stock. CNA may prove to a compelling pick for investors.
Zacks' Top 10 Stocks for 2017
In addition to the stocks discussed above, would you like to know about our 10 finest buy-and-hold tickers for the entirety of 2017?
Who wouldn't? As of early December, the 2016 Top 10 produced 5 double-digit winners including oil and natural gas giant Pioneer Natural Resources which racked up a stellar +50% gain. The new list is painstakingly hand-picked from 4,400 companies covered by the Zacks Rank. Be among the very first to see it>>
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Should Value Investors Pick CNA Financial (CNA)?
Value investing is easily one of the most popular ways to find great stocks in any market environment. After all, who wouldn’t want to find stocks that are either flying under the radar and are compelling buys, or offer up tantalizing discounts when compared to fair value?
One way to find these companies is by looking at several key metrics and financial ratios, many of which are crucial in the value stock selection process. Let’s put CNA Financial Corporation (CNA - Free Report) stock into this equation and find out if it is a good choice for value-oriented investors right now, or if investors subscribing to this methodology should look elsewhere for top picks:
PE Ratio
A key metric that value investors always look at is the Price to Earnings Ratio, or PE for short. This shows us how much investors are willing to pay for each dollar of earnings in a given stock, and is easily one of the most popular financial ratios in the world. The best use of the PE ratio is to compare the stock’s current PE ratio with: a) where this ratio has been in the past; b) how it compares to the average for the industry/sector; and c) how it compares to the market as a whole.
On this front, CNA Financial has a trailing twelve months PE ratio of 18.11, as you can see in the chart below:
This level actually compares pretty favorably with the market at large, as the PE for the S&P 500 compares in at about 19.50. If we focus on the stock’s long-term PE trend, the current level puts CNA Financial’s current PE ratio above its midpoint over the past five years, with the number having risen rapidly lately.
Further, the stock’s PE also compares favorably with the Zacks classified Insurance-Property & Casualty industry’s trailing twelve months PE ratio, which stands at 19.87. At the very least, this indicates that the stock is relatively undervalued right now, compared to its peers.
We should also point out that CNA Financial has a forward PE ratio (price relative to this year’s earnings) of just 13.24, so it is fair to say that a slightly more value-oriented path may be ahead for CNA Financial stock in the near term too.
P/S Ratio
Another key metric to note is the Price/Sales ratio. This approach compares a given stock’s price to its total sales, where a lower reading is generally considered better. Some people like this metric more than other value-focused ones because it looks at sales, something that is far harder to manipulate with accounting tricks than earnings.
Right now, CNA Financial has a P/S ratio of about 1.24. This is lower than the S&P 500 average, which comes in at 3 right now.
PEG Ratio
While earnings are certainly important, it is essential to know how much you are paying for the growth of earnings as well. One can easily do that with the PEG ratio (ratio of the P/E to the expected future earnings growth rate).The PEG ratio gives a more complete picture of the valuation of a stock than the P/E ratio.
CNA Financial’s PEG ratio stands at just 2.63, compared with the Zacks Insurance-Property & Casualty industry average of 3.12. This suggests a decent undervalued trading relative to its earnings growth potential right now.
Broad Value Outlook
In aggregate, CNA Financial currently has a Zacks Value Style Score of ‘B’, putting it into the top 40% of all stocks we cover from this look. This makes CNA Financial a solid choice for value investors.
What About the Stock Overall?
Though CNA Financial might be a good choice for value investors, there are plenty of other factors to consider before investing in this name. In particular, it is worth noting that the company has a Growth grade of ‘B’ and a Momentum score of ‘C’. This gives CNA a Zacks VGM score—or its overarching fundamental grade—of ‘B’. (You can read more about the Zacks Style Scores here >>)
Meanwhile, the company’s recent earnings estimates have been rising. The current quarter has seen one estimate go higher in the past sixty days compared to two lower, while the full year estimate has three eight up and one down in the same time period.
This has had a positive impact on the consensus estimate though as the current quarter consensus estimate has risen by 2.6% in the past two months, while the full year estimate has inched up by 0.6%. You can see the consensus estimate trend and recent price action for the stock in the chart below:
CNA Financial Corporation Price and Consensus
CNA Financial Corporation Price and Consensus | CNA Financial Corporation Quote
This positive trend is why the stock has a Zacks Rank #2 (Buy) and why we are looking for in-line performance from the company in the near term.
Bottom Line
CNA Financial is an inspired choice for value investors, as it is hard to beat its incredible lineup of statistics on this front. Moreover, a strong industry rank (Top 25% compared to over 250 industries) further underlines the potential of the company overall. In fact, over the past two years, the Zacks Insurance-Property & Casualty industry has clearly outperformed the broader market, as you can see below:
With all factors being positive along with a Zacks Rank #2, it is difficult to not get excited about this stock. CNA may prove to a compelling pick for investors.
Zacks' Top 10 Stocks for 2017
In addition to the stocks discussed above, would you like to know about our 10 finest buy-and-hold tickers for the entirety of 2017?
Who wouldn't? As of early December, the 2016 Top 10 produced 5 double-digit winners including oil and natural gas giant Pioneer Natural Resources which racked up a stellar +50% gain. The new list is painstakingly hand-picked from 4,400 companies covered by the Zacks Rank. Be among the very first to see it>>