Investors looking for stocks in the Insurance - Property and Casualty sector might want to consider either Progressive (PGR) or Kinsale Capital Group, Inc. (KNSL). But which of these two companies is the best option for those looking for undervalued stocks? 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 Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
Currently, Progressive has a Zacks Rank of #2 (Buy), while Kinsale Capital Group, Inc. has a Zacks Rank of #3 (Hold). Investors should feel comfortable knowing that PGR likely has seen a stronger improvement to its earnings outlook than KNSL 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.
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.
PGR currently has a forward P/E ratio of 13.91, while KNSL has a forward P/E of 24.67. We also note that PGR has a PEG ratio of 1.43. 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. KNSL currently has a PEG ratio of 1.66.
Another notable valuation metric for PGR is its P/B ratio of 4.42. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. By comparison, KNSL has a P/B of 6.11.
Based on these metrics and many more, PGR holds a Value grade of B, while KNSL has a Value grade of D.
PGR 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 PGR is likely the superior value option right now.
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The Progressive Corporation (PGR): Free Stock Analysis Report Kinsale Capital Group, Inc. (KNSL): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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