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FAF vs. SIGI: Which Stock Should Value Investors Buy Now?
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Investors interested in Insurance - Property and Casualty stocks are likely familiar with First American Financial (FAF - Free Report) and Selective Insurance (SIGI - 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.
We have found that the best way to discover great value opportunities is to pair a strong Zacks Rank with a great 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.
First American Financial has a Zacks Rank of #2 (Buy), while Selective Insurance has a Zacks Rank of #3 (Hold) right now. Investors should feel comfortable knowing that FAF likely has seen a stronger improvement to its earnings outlook than SIGI has recently. But this is only part of the picture 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.
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.
FAF currently has a forward P/E ratio of 11.41, while SIGI has a forward P/E of 18.63. We also note that FAF has a PEG ratio of 1.04. 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. SIGI currently has a PEG ratio of 1.76.
Another notable valuation metric for FAF is its P/B ratio of 1.56. 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, SIGI has a P/B of 2.39.
These metrics, and several others, help FAF earn a Value grade of B, while SIGI has been given a Value grade of D.
FAF is currently sporting an improving earnings outlook, which makes it stick out in our Zacks Rank model. And, based on the above valuation metrics, we feel that FAF is likely the superior value option right now.
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FAF vs. SIGI: Which Stock Should Value Investors Buy Now?
Investors interested in Insurance - Property and Casualty stocks are likely familiar with First American Financial (FAF - Free Report) and Selective Insurance (SIGI - 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.
We have found that the best way to discover great value opportunities is to pair a strong Zacks Rank with a great 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.
First American Financial has a Zacks Rank of #2 (Buy), while Selective Insurance has a Zacks Rank of #3 (Hold) right now. Investors should feel comfortable knowing that FAF likely has seen a stronger improvement to its earnings outlook than SIGI has recently. But this is only part of the picture 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.
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.
FAF currently has a forward P/E ratio of 11.41, while SIGI has a forward P/E of 18.63. We also note that FAF has a PEG ratio of 1.04. 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. SIGI currently has a PEG ratio of 1.76.
Another notable valuation metric for FAF is its P/B ratio of 1.56. 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, SIGI has a P/B of 2.39.
These metrics, and several others, help FAF earn a Value grade of B, while SIGI has been given a Value grade of D.
FAF is currently sporting an improving earnings outlook, which makes it stick out in our Zacks Rank model. And, based on the above valuation metrics, we feel that FAF is likely the superior value option right now.