Investors looking for stocks in the Insurance - Property and Casualty sector might want to consider either Tokio Marine Holdings Inc. (TKOMY) or W.R. Berkley (WRB). 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 favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
Tokio Marine Holdings Inc. has a Zacks Rank of #2 (Buy), while W.R. Berkley has a Zacks Rank of #4 (Sell) right now. The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that TKOMY 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.
TKOMY currently has a forward P/E ratio of 10.60, while WRB has a forward P/E of 15.69. We also note that TKOMY has a PEG ratio of 0.71. 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. WRB currently has a PEG ratio of 2.99.
Another notable valuation metric for TKOMY is its P/B ratio of 2.29. 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, WRB has a P/B of 2.78.
These metrics, and several others, help TKOMY earn a Value grade of A, while WRB has been given a Value grade of C.
TKOMY stands above WRB thanks to its solid earnings outlook, and based on these valuation figures, we also feel that TKOMY is the superior value option right now.
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Tokio Marine Holdings Inc. (TKOMY): 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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