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

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Investors interested in stocks from the Insurance - Property and Casualty sector have probably already heard of NMI Holdings (NMIH - Free Report) and Chubb (CB - Free Report) . But which of these two companies is the best option for those looking for undervalued stocks? Let's take a closer look.

Everyone has their own methods for finding great value opportunities, but our model includes pairing an impressive grade in the Value category of our Style Scores system with a strong Zacks Rank. The proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.

Right now, NMI Holdings is sporting a Zacks Rank of #2 (Buy), while Chubb has a Zacks Rank of #3 (Hold). Investors should feel comfortable knowing that NMIH likely has seen a stronger improvement to its earnings outlook than CB has recently. But this is just one factor that value investors are interested in.

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.

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.

NMIH currently has a forward P/E ratio of 7.59, while CB has a forward P/E of 12.42. We also note that NMIH has a PEG ratio of 1.10. 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. CB currently has a PEG ratio of 6.31.

Another notable valuation metric for NMIH is its P/B ratio of 1.31. 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, CB has a P/B of 1.66.

These are just a few of the metrics contributing to NMIH's Value grade of B and CB's Value grade of C.

NMIH has seen stronger estimate revision activity and sports more attractive valuation metrics than CB, so it seems like value investors will conclude that NMIH is the superior option right now.


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