Investors looking for stocks in the Insurance - Multi line sector might want to consider either Principal Financial (PFG) or Prudential (PUK). But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.
There are plenty of strategies for discovering value stocks, but we have found that pairing a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system produces the best returns. 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, Principal Financial is sporting a Zacks Rank of #2 (Buy), while Prudential has a Zacks Rank of #3 (Hold). This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that PFG is likely seeing its earnings outlook improve to a greater extent. However, value investors will care about much more than just this.
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.
Our Value category highlights undervalued companies by looking at a variety of key metrics, including the popular P/E ratio, as well as the P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that have been used by value investors for years.
PFG currently has a forward P/E ratio of 9.75, while PUK has a forward P/E of 13.10. We also note that PFG has a PEG ratio of 0.69. 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. PUK currently has a PEG ratio of 0.79.
Another notable valuation metric for PFG is its P/B ratio of 1.75. 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, PUK has a P/B of 2.15.
Based on these metrics and many more, PFG holds a Value grade of A, while PUK has a Value grade of C.
PFG sticks out from PUK in both our Zacks Rank and Style Scores models, so value investors will likely feel that PFG is the better option right now.
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Principal Financial Group, Inc. (PFG): Free Stock Analysis Report Prudential Public Limited Company (PUK): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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