Investors with an interest in Insurance - Property and Casualty stocks have likely encountered both Axis Capital (AXS) and Cincinnati Financial (CINF). But which of these two companies is the best option for those looking for undervalued stocks? Let's take a closer look.
The best way to find great value stocks is to pair a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system. The proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Axis Capital and Cincinnati Financial are both sporting 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. However, value investors will care about much more than just this.
Value investors analyze a variety of traditional, tried-and-true metrics to help find companies that they believe are undervalued at their 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.
AXS currently has a forward P/E ratio of 7.50, while CINF has a forward P/E of 24.52. We also note that AXS has a PEG ratio of 1.10. 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. CINF currently has a PEG ratio of 7.01.
Another notable valuation metric for AXS is its P/B ratio of 1.27. 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, CINF has a P/B of 1.71.
These metrics, and several others, help AXS earn a Value grade of B, while CINF has been given a Value grade of C.
Both AXS and CINF are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that AXS is the superior value option right now.
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Axis Capital Holdings Limited (AXS): Free Stock Analysis Report Cincinnati Financial Corporation (CINF): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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