Investors interested in stocks from the Insurance - Property and Casualty sector have probably already heard of Allstate (ALL - Free Report) and 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.
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 emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
Right now, Allstate is sporting a Zacks Rank of #2 (Buy), while W.R. Berkley has a Zacks Rank of #4 (Sell). Investors should feel comfortable knowing that ALL likely has seen a stronger improvement to its earnings outlook than WRB has recently. 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.
Our Value category grades stocks based on a number of key metrics, including the tried-and-true P/E ratio, the P/S ratio, earnings yield, and cash flow per share, as well as a variety of other fundamentals that value investors frequently use.
ALL currently has a forward P/E ratio of 8.98, while WRB has a forward P/E of 19.03. We also note that ALL has a PEG ratio of 1.08. 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 2.11.
Another notable valuation metric for ALL is its P/B ratio of 1.33. 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 1.61.
These metrics, and several others, help ALL earn a Value grade of A, while WRB has been given a Value grade of C.
ALL has seen stronger estimate revision activity and sports more attractive valuation metrics than WRB, so it seems like value investors will conclude that ALL is the superior option right now.