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ALL vs. PROS: Which Stock Is the Better Value Option?
Investors interested in stocks from the Insurance - Property and Casualty sector have probably already heard of Allstate (ALL - Free Report) and ProSight Global, Inc. . 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 Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
Currently, Allstate has a Zacks Rank of #2 (Buy), while ProSight Global, Inc. has a Zacks Rank of #3 (Hold). Investors should feel comfortable knowing that ALL likely has seen a stronger improvement to its earnings outlook than PROS has recently. However, value investors will care about much more than just this.
Value investors are also interested in a number of tried-and-true valuation metrics that help show when 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.
ALL currently has a forward P/E ratio of 11.02, while PROS has a forward P/E of 14.07. We also note that ALL has a PEG ratio of 1.32. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. PROS currently has a PEG ratio of 3.06.
Another notable valuation metric for ALL is its P/B ratio of 1.52. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. By comparison, PROS has a P/B of 1.75.
These are just a few of the metrics contributing to ALL's Value grade of A and PROS's Value grade of C.
ALL 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 ALL is likely the superior value option right now.