Investors with an interest in Insurance - Property and Casualty stocks have likely encountered both RenaissanceRe (RNR) and Berkshire Hathaway B (BRK.B). 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.
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 Zacks Rank is a proven strategy that targets companies with positive earnings estimate revision trends, while our Style Scores work to grade companies based on specific traits.
Right now, RenaissanceRe is sporting a Zacks Rank of #2 (Buy), while Berkshire Hathaway B has a Zacks Rank of #3 (Hold). Investors should feel comfortable knowing that RNR likely has seen a stronger improvement to its earnings outlook than BRK.B has recently. However, value investors will care about much more than just this.
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.
RNR currently has a forward P/E ratio of 8.81, while BRK.B has a forward P/E of 23.36. We also note that RNR has a PEG ratio of 2.08. 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. BRK.B currently has a PEG ratio of 3.34.
Another notable valuation metric for RNR is its P/B ratio of 1.08. 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, BRK.B has a P/B of 1.53.
Based on these metrics and many more, RNR holds a Value grade of B, while BRK.B has a Value grade of C.
RNR 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 RNR is likely the superior value option right now.
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RenaissanceRe Holdings Ltd. (RNR): Free Stock Analysis Report Berkshire Hathaway Inc. (BRK.B): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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