Investors with an interest in Insurance - Property and Casualty stocks have likely encountered both Travelers (TRV) and W.R. Berkley (WRB). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.
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 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, Travelers is sporting a Zacks Rank of #1 (Strong Buy), while W.R. Berkley has a Zacks Rank of #3 (Hold). The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that TRV has an improving earnings outlook. But this is just one factor that value investors are interested in.
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.
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.
TRV currently has a forward P/E ratio of 10.86, while WRB has a forward P/E of 16.77. We also note that TRV has a PEG ratio of 2.38. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. WRB currently has a PEG ratio of 2.73.
Another notable valuation metric for TRV is its P/B ratio of 1.9. 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, WRB has a P/B of 2.91.
Based on these metrics and many more, TRV holds a Value grade of A, while WRB has a Value grade of C.
TRV sticks out from WRB in both our Zacks Rank and Style Scores models, so value investors will likely feel that TRV is the better option right now.
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The Travelers Companies, Inc. (TRV): Free Stock Analysis Report W.R. Berkley Corporation (WRB): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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