CNA vs. CINF: Which Stock Is the Better Value Option?

Investors interested in stocks from the Insurance - Property and Casualty sector have probably already heard of CNA Financial (CNA) and Cincinnati Financial (CINF). But which of these two stocks presents investors with the better value opportunity right now? Let's 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 emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.

Both CNA Financial and Cincinnati Financial have a Zacks Rank of #2 (Buy) right now. This means that both companies have witnessed positive earnings estimate revisions, so investors should feel comfortable knowing that both of these stocks have an improving earnings outlook. 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 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.

CNA currently has a forward P/E ratio of 10.13, while CINF has a forward P/E of 26.30. We also note that CNA has a PEG ratio of 4.07. 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. CINF currently has a PEG ratio of 7.56.

Another notable valuation metric for CNA is its P/B ratio of 1.16. 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, CINF has a P/B of 1.69.

These are just a few of the metrics contributing to CNA's Value grade of A and CINF's Value grade of C.

Both CNA and CINF are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that CNA is the superior value option right now.

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This article originally published on Zacks Investment Research (zacks.com).

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