Investors looking for stocks in the Insurance - Property and Casualty sector might want to consider either CNA Financial (CNA) or Berkshire Hathaway B (BRK.B). But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.
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 proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
CNA Financial has a Zacks Rank of #2 (Buy), while Berkshire Hathaway B has a Zacks Rank of #3 (Hold) right now. This means that CNA's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. But this is just one piece of the puzzle for value investors.
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.
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.
CNA currently has a forward P/E ratio of 9.16, while BRK.B has a forward P/E of 16.02. We also note that CNA has a PEG ratio of 1.83. 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. BRK.B currently has a PEG ratio of 2.29.
Another notable valuation metric for CNA is its P/B ratio of 1.19. 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, BRK.B has a P/B of 1.39.
These are just a few of the metrics contributing to CNA's Value grade of A and BRK.B's Value grade of D.
CNA stands above BRK.B thanks to its solid earnings outlook, and based on these valuation figures, we also feel that CNA is the superior value option right now.
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