MTG vs. ZURVY: Which Stock Is the Better Value Option?

Investors interested in stocks from the Insurance - Multi line sector have probably already heard of MGIC Investment (MTG) and Zurich Insurance Group Ltd. (ZURVY). But which of these two stocks presents investors with the better value opportunity right now? 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 emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.

MGIC Investment and Zurich Insurance Group Ltd. are sporting Zacks Ranks of #2 (Buy) and #4 (Sell), respectively, right now. Investors should feel comfortable knowing that MTG likely has seen a stronger improvement to its earnings outlook than ZURVY has recently. But this is just one piece of the puzzle for value investors.

Value investors are also interested in a number of tried-and-true valuation metrics that help show when a company is undervalued at its 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.

MTG currently has a forward P/E ratio of 9.09, while ZURVY has a forward P/E of 15.97. We also note that MTG has a PEG ratio of 1.45. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. ZURVY currently has a PEG ratio of 1.70.

Another notable valuation metric for MTG is its P/B ratio of 1.21. 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, ZURVY has a P/B of 3.85.

These metrics, and several others, help MTG earn a Value grade of B, while ZURVY has been given a Value grade of C.

MTG stands above ZURVY thanks to its solid earnings outlook, and based on these valuation figures, we also feel that MTG 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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