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ALL vs. PGR: Which Stock Should Value Investors Buy Now?

Zacks

Investors interested in Insurance – Property and Casualty stocks are likely familiar with Allstate (ALL) and Progressive (PGR). 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 Zacks Rank is a proven strategy that targets companies with positive earnings estimate revision trends, while our Style Scores work to grade companies based on specific traits.

Right now, both Allstate and Progressive are sporting a Zacks Rank of # 2 (Buy). This means that both companies have witnessed positive earnings estimate revisions, so investors should feel comfortable knowing that both of these stocks have an improving earnings outlook. 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.


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.

ALL currently has a forward P/E ratio of 10.02, while PGR has a forward P/E of 13.79. We also note that ALL has a PEG ratio of 1.20. 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. PGR currently has a PEG ratio of 1.88.

Another notable valuation metric for ALL is its P/B ratio of 1.64. 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, PGR has a P/B of 3.72.

Based on these metrics and many more, ALL holds a Value grade of A, while PGR has a Value grade of C.

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


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Zacks Investment Research
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