Investors with an interest in Insurance - Property and Casualty stocks have likely encountered both Axis Capital (AXS) and Berkshire Hathaway B (BRK.B). But which of these two companies is the best option for those looking for undervalued stocks? Let's take a closer look.
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 Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
Currently, Axis Capital has a Zacks Rank of #1 (Strong Buy), while Berkshire Hathaway B has a Zacks Rank of #3 (Hold). The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that AXS has an improving earnings outlook. However, value investors will care about much more than just this.
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.
AXS currently has a forward P/E ratio of 6.87, while BRK.B has a forward P/E of 22.97. We also note that AXS has a PEG ratio of 1.37. 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 3.28.
Another notable valuation metric for AXS is its P/B ratio of 1.10. 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, BRK.B has a P/B of 1.44.
These are just a few of the metrics contributing to AXS's Value grade of B and BRK.B's Value grade of D.
AXS stands above BRK.B thanks to its solid earnings outlook, and based on these valuation figures, we also feel that AXS is the superior value option right now.
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