Investors with an interest in Insurance - Property and Casualty stocks have likely encountered both Essent Group (ESNT) and Cincinnati Financial (CINF). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.
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 Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
Essent Group and Cincinnati Financial are both sporting a Zacks Rank of #2 (Buy) right now. Investors should feel comfortable knowing that both of these stocks have an improving earnings outlook since the Zacks Rank favors companies that have witnessed positive analyst estimate revisions. But this is only part of the picture 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.
Our Value category grades stocks based on a number of key metrics, including the tried-and-true P/E ratio, the P/S ratio, earnings yield, and cash flow per share, as well as a variety of other fundamentals that value investors frequently use.
ESNT currently has a forward P/E ratio of 8.66, while CINF has a forward P/E of 27.65. We also note that ESNT has a PEG ratio of 3.44. 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 9.70.
Another notable valuation metric for ESNT is its P/B ratio of 1.09. 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, CINF has a P/B of 1.66.
Based on these metrics and many more, ESNT holds a Value grade of B, while CINF has a Value grade of C.
Both ESNT and CINF are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that ESNT is the superior value option right now.
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Essent Group Ltd. (ESNT): Free Stock Analysis Report Cincinnati Financial Corporation (CINF): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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