Is CNA Financial (CNA) Stock Undervalued Right Now?

Here at Zacks, our focus is on the proven Zacks Rank system, which emphasizes earnings estimates and estimate revisions to find great stocks. Nevertheless, we are always paying attention to the latest value, growth, and momentum trends to underscore strong picks.

Looking at the history of these trends, perhaps none is more beloved than value investing. This strategy simply looks to identify companies that are being undervalued by the broader market. Value investors use a variety of methods, including tried-and-true valuation metrics, to find these stocks.

Luckily, Zacks has developed its own Style Scores system in an effort to find stocks with specific traits. Value investors will be interested in the system's "Value" category. Stocks with both "A" grades in the Value category and high Zacks Ranks are among the strongest value stocks on the market right now.

One stock to keep an eye on is CNA Financial (CNA). CNA is currently sporting a Zacks Rank #2 (Buy) and an A for Value. The stock has a Forward P/E ratio of 9.7. This compares to its industry's average Forward P/E of 27.26. Over the past year, CNA's Forward P/E has been as high as 11.18 and as low as 9.52, with a median of 10.26.

We also note that CNA holds a PEG ratio of 3.90. 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. CNA's PEG compares to its industry's average PEG of 3.99. CNA's PEG has been as high as 9.20 and as low as 3.19, with a median of 5.60, all within the past year.

Another valuation metric that we should highlight is CNA's P/B ratio of 1.16. 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. This stock's P/B looks solid versus its industry's average P/B of 1.43. CNA's P/B has been as high as 1.38 and as low as 1.10, with a median of 1.24, over the past year.

Value investors also love the P/S ratio, which is calculated by simply dividing a stock's price with the company's sales. Some people prefer this metric because sales are harder to manipulate on an income statement. This means it could be a truer performance indicator. CNA has a P/S ratio of 0.84. This compares to its industry's average P/S of 1.29.

Mercury General (MCY) may be another strong Insurance - Property and Casualty stock to add to your shortlist. MCY is a Zacks Rank of #1 (Strong Buy) stock with a Value grade of A.

Additionally, Mercury General has a P/B ratio of 2.24 while its industry's price-to-book ratio sits at 1.43. For MCY, this valuation metric has been as high as 2.35, as low as 1.34, with a median of 1.92 over the past year.

These are only a few of the key metrics included in CNA Financial and Mercury General strong Value grade, but they help show that the stocks are likely undervalued right now. When factoring in the strength of its earnings outlook, CNA and MCY look like an impressive value stock at the moment.

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This article originally published on Zacks Investment Research (zacks.com).

Zacks Investment Research