Investors interested in Insurance - Property and Casualty stocks are likely familiar with Third Point Reinsurance (TPRE) and Mercury General (MCY). But which of these two stocks offers value investors a better bang for their buck right now? We'll need to take a closer look.
There are plenty of strategies for discovering value stocks, but we have found that pairing a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system produces the best returns. The proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Right now, Third Point Reinsurance is sporting a Zacks Rank of #2 (Buy), while Mercury General has a Zacks Rank of #5 (Strong Sell). This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that TPRE 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 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 Value category of the Style Scores system identifies undervalued companies by looking at a number of key metrics. These include the long-favored P/E ratio, P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that help us determine a company's fair value.
TPRE currently has a forward P/E ratio of 5.67, while MCY has a forward P/E of 15.94. We also note that TPRE has a PEG ratio of 0.38. 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. MCY currently has a PEG ratio of 0.65.
Another notable valuation metric for TPRE is its P/B ratio of 0.76. 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, MCY has a P/B of 1.58.
These are just a few of the metrics contributing to TPRE's Value grade of B and MCY's Value grade of D.
TPRE 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 TPRE is likely the superior value option right now.
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TPRE vs. MCY: Which Stock Should Value Investors Buy Now?
Investors interested in Insurance - Property and Casualty stocks are likely familiar with Third Point Reinsurance (TPRE) and Mercury General (MCY). But which of these two stocks offers value investors a better bang for their buck right now? We'll need to take a closer look.
There are plenty of strategies for discovering value stocks, but we have found that pairing a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system produces the best returns. The proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Right now, Third Point Reinsurance is sporting a Zacks Rank of #2 (Buy), while Mercury General has a Zacks Rank of #5 (Strong Sell). This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that TPRE 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 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 Value category of the Style Scores system identifies undervalued companies by looking at a number of key metrics. These include the long-favored P/E ratio, P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that help us determine a company's fair value.
TPRE currently has a forward P/E ratio of 5.67, while MCY has a forward P/E of 15.94. We also note that TPRE has a PEG ratio of 0.38. 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. MCY currently has a PEG ratio of 0.65.
Another notable valuation metric for TPRE is its P/B ratio of 0.76. 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, MCY has a P/B of 1.58.
These are just a few of the metrics contributing to TPRE's Value grade of B and MCY's Value grade of D.
TPRE 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 TPRE is likely the superior value option right now.