Investors interested in stocks from the Insurance - Life Insurance sector have probably already heard of Lincoln National (LNC) and The Baldwin Insurance Group (BWIN). 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 proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
Lincoln National has a Zacks Rank of #2 (Buy), while The Baldwin Insurance Group has a Zacks Rank of #5 (Strong Sell) right now. This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that LNC is likely seeing its earnings outlook improve to a greater extent. But this is only part of the picture for value investors.
Value investors also try to analyze a wide range of traditional figures and metrics to help determine whether a company is undervalued at its 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.
LNC currently has a forward P/E ratio of 5.44, while BWIN has a forward P/E of 17.46. We also note that LNC has a PEG ratio of 0.55. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. BWIN currently has a PEG ratio of 0.93.
Another notable valuation metric for LNC is its P/B ratio of 0.9. 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, BWIN has a P/B of 3.29.
These are just a few of the metrics contributing to LNC's Value grade of B and BWIN's Value grade of F.
LNC 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 LNC is likely the superior value option right now.
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Lincoln National Corporation (LNC): Free Stock Analysis Report Baldwin Insurance Group, Inc. (BWIN): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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