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NMIH vs. BRK.B: Which Stock Is the Better Value Option?

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Investors with an interest in Insurance - Property and Casualty stocks have likely encountered both NMI Holdings (NMIH - Free Report) and Berkshire Hathaway B (BRK.B - Free Report) . But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.

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 proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.

NMI Holdings and Berkshire Hathaway B are both sporting a Zacks Rank of # 2 (Buy) right now. The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that both of these companies have improving earnings outlooks. However, value investors will care about much more than just this.

Value investors also tend to look at a number of traditional, tried-and-true figures to help them find stocks that they believe are undervalued at their 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.

NMIH currently has a forward P/E ratio of 7.96, while BRK.B has a forward P/E of 21.82. We also note that NMIH has a PEG ratio of 0.75. 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. BRK.B currently has a PEG ratio of 3.12.

Another notable valuation metric for NMIH is its P/B ratio of 1.38. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. For comparison, BRK.B has a P/B of 1.45.

Based on these metrics and many more, NMIH holds a Value grade of A, while BRK.B has a Value grade of C.

Both NMIH and BRK.B are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that NMIH is the superior value option right now.


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