Investors looking for stocks in the Insurance - Property and Casualty sector might want to consider either Mercury General (MCY - Free Report) or W.R. Berkley (WRB - Free Report) . But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.
We have found that the best way to discover great value opportunities is to pair a strong Zacks Rank with a great grade in the Value category of our Style Scores system. The proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
Right now, Mercury General is sporting a Zacks Rank of #1 (Strong Buy), while W.R. Berkley 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 MCY 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 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.
MCY currently has a forward P/E ratio of 12.44, while WRB has a forward P/E of 26.78. We also note that MCY has a PEG ratio of 0.84. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. WRB currently has a PEG ratio of 2.98.
Another notable valuation metric for MCY is its P/B ratio of 1.31. 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, WRB has a P/B of 1.86.
These are just a few of the metrics contributing to MCY's Value grade of B and WRB's Value grade of C.
MCY sticks out from WRB in both our Zacks Rank and Style Scores models, so value investors will likely feel that MCY is the better option right now.