Investors interested in stocks from the Insurance - Property and Casualty sector have probably already heard of Axis Capital (AXS) and Cincinnati Financial (CINF). 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.
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 proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Right now, Axis Capital is sporting a Zacks Rank of #2 (Buy), while Cincinnati Financial has a Zacks Rank of #3 (Hold). Investors should feel comfortable knowing that AXS likely has seen a stronger improvement to its earnings outlook than CINF has recently. 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.
AXS currently has a forward P/E ratio of 8.07, while CINF has a forward P/E of 23.29. We also note that AXS has a PEG ratio of 0.99. 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 4.39.
Another notable valuation metric for AXS is its P/B ratio of 1.35. 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 1.7.
These metrics, and several others, help AXS earn a Value grade of B, while CINF has been given a Value grade of C.
AXS 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 AXS is likely the superior value option right now.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
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).
Zacks Investment Research
