Based on key financial metrics such as the price-to-sales ratio, shareholder yield and the price-earnings ratio, the following 5 stocks made the list for top value stocks in the Insurance - Property & Casualty industry. Those looking for value stocks to add to their portfolio may want to use this list as a starting point for further investment research.

Why Focus on Undervalued Insurance - Property & Casualty Stocks?

Value investors seek to buy stocks at a discount to their intrinsic value. Long-term returns show that such strategies are advantageous. Value stocks, as a group, tend to outperform growth stocks over extended periods of time. Typically, value investors perform financial analysis of numerous metrics, don’t follow the herd and are long-term investors.

AAII’s A+ Investor Value Grade is derived from a stock’s Value Score. The Value Score is the percentile rank of the average of the percentile ranks of the price-to-sales ratio, price-earnings ratio, enterprise-value-to-EBITDA (EV/EBITDA) ratio, shareholder yield, price-to-book-value ratio and price-to-free-cash-flow ratio. The score is variable, meaning it can consider all six ratios or, should any of the six ratios not be valid, the remaining ratios that are valid. To be assigned a Value Score, stocks must have a valid (non-null) ratio and corresponding ranking for at least two of the six valuation ratios.

What Goes Into AAII’s Value Grade?

Stock evaluation requires access to huge amounts of data as well as the knowledge and time to sift through it all, make sense of financial ratios, read income statements and analyze recent stock movement. AAII created A+ Investor, a robust data suite that condenses data research in an actionable and customizable way suitable for investors of all knowledge levels, to help investors with that task.

AAII’s proprietary stock grades come with A+ Investor. These offer intuitive A–F grades for more than just value. It is possible for a stock to appear cheap based on one valuation metric but appear expensive on another. It is also possible for one valuation ratio to be associated with outperforming stocks during certain periods of time but not others. Some stocks may even have null values for certain metrics like the price-earnings ratio or the price-to-book ratio but not others. An example of this would be a company with losses instead of profits or a negative book value because of heavy borrowing. Negative earnings or book value result in non-meaningful ratios that are left blank or null.

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5 Undervalued Insurance - Property & Casualty Stocks

Of course, there are countless value stocks that are worth mentioning, but this is a concise list of the top 5 undervalued stocks in the Insurance - Property & Casualty industry for Monday, April 01, 2024. Let’s take a closer look at their individual scores to see how they measure up against each other and the Insurance - Property & Casualty industry median.

The Value Grade is assigned based on how each stock’s composite valuation compares to all other stocks.

The process for assigning grades starts with each variable for a given stock. The percentile rankings for all valid ratios that a stock has are calculated. So, for instance, a stock could have a price-to-book ranking in the 43rd percentile, a price-earnings ranking in the 67th percentile, a price-to-sales ranking in the 23rd percentile, etc. Then, those rankings are averaged for each stock. (A minimum of two valid variables are required, though all six will be used if available.)

Once the average of the individual variables is calculated, that average is ranked against all stocks. Put another way, each stock’s composite valuation is compared to all other stocks. These ranks are then sorted into quintiles from the cheapest 20% (a grade of A) to the most expensive 20% (a grade of F).

As always, we recommend that you conduct proper due diligence and research before investing in any security. We also suggest that investors utilize numerous grades, not just value, when it comes to deciding whether a company is a good fit for their allocation needs.

Essent Group Ltd’s Value Grade

Value Grade:

Essent Group Ltd. is a holding company. The Company, through its wholly owned subsidiaries, offers private mortgage insurance, reinsurance, risk management products and title insurance and settlement services to mortgage lenders, borrowers, and investors to support homeownership. In addition to offering mortgage insurance, it provides contract underwriting services on a limited basis through CUW Solutions, LLC. It also offers mortgage-related insurance and reinsurance through its Bermuda-based subsidiary, Essent Reinsurance Ltd. It provides private capital to mitigate mortgage credit risk, allowing lenders to make additional mortgage financing available to prospective homeowners. Its products and services include mortgage insurance, contract underwriting, and Bermuda-Based insurance and reinsurance. It offers two types of private mortgage insurance, namely primary and pool. Its subsidiaries also include Agents National Title Holding Company and Boston National Holdings LLC.

Stocks with a Value Score from 81 to 100 are considered deep value, those with a score between 61 and 80 are value and so on.

Essent Group Ltd has a Value Score of 70, which is considered to be undervalued.

When you look at Essent Group Ltd’s price-to-sales ratio at 5.67 compared to the industry median at 1.33, this company has a higher price relative to revenue compared to its peers. This could make Essent Group Ltd’s stock less attractive for value investors.

Essent Group Ltd’s price-earnings ratio is 9.15 compared to the industry median at 14.24. This means it has a lower share price relative to earnings compared to its peers. This could make Essent Group Ltd more attractive for value investors.

Now, let’s assess Essent Group Ltd’s EV/EBITDA ratio, also known as enterprise multiple. At 6.8, when compared to the industry median of 6.4, the company may be considered overvalued in relation to its peers. Value investors could use the enterprise multiple to identify stocks that are considered overvalued or undervalued relative to their industry.

Shareholder yield is the sum of a stock’s dividend yield (paid over previous 12 months minus special dividends) and the percentage of net share buybacks over the previous 12 months. Essent Group Ltd’s shareholder yield is higher than its industry median ratio of 2.61%. Value investors may look for an attractive shareholder yield because it can be a powerful tool for identifying if the company has a good management team.

As one of the most common value metrics, the price-to-book ratio evaluates a company’s current market price relative to its book value. Essent Group Ltd’s price-to-book ratio is lower than its industry median ratio of 1.31. This could make Essent Group Ltd more attractive to investors looking for a new addition to their portfolio.

Lastly, let’s take a look at Essent Group Ltd’s price-to-free-cash-flow ratio (P/FCF), which can indicate a company’s market value relative to its operating cash flow. Essent Group Ltd’s price-to-free-cash-flow ratio is lower than its industry median ratio of 10.08. This could make Essent Group Ltd more attractive because the lower P/FCF ratio indicates that Essent Group Ltd is undervalued. The P/FCF ratio metric can also be viewed over a long-term time frame to see if the company's cash flow to share price value is generally improving or worsening.

Heritage Insurance Holdings Inc’s Value Grade

Value Grade:

Heritage Insurance Holdings, Inc. is a property and casualty insurance holding company. The Company primarily provides personal and commercial residential insurance through its insurance company subsidiaries. It is vertically integrated and controls or manages substantially all aspects of insurance underwriting, customer service, actuarial analysis, distribution and claims processing and adjusting. Its subsidiaries include Heritage Property & Casualty Insurance Company (Heritage P&C;), which provides personal and commercial residential property insurance and commercial general liability insurance; Narragansett Bay Insurance Company (NBIC), which provides personal and commercial residential property insurance, and Zephyr Insurance Company (Zephyr), which provides personal residential and wind-only property insurance in Hawaii. The Company provides personal residential insurance in approximately 14 eastern and gulf states and commercial residential insurance in three of those states.

Stocks with a Value Score from 81 to 100 are considered deep value, those with a score between 61 and 80 are value and so on.

Heritage Insurance Holdings Inc has a Value Score of 85, which is considered to be undervalued.

Heritage Insurance Holdings Inc’s price-earnings ratio is 6.2 compared to the industry median at 14.2. This means that it has a lower price relative to its earnings compared to its peers. This makes Heritage Insurance Holdings Inc more attractive for value investors.

Heritage Insurance Holdings Inc’s price-to-book ratio is lower than its peers. This could make Heritage Insurance Holdings Inc fairly attractive for value investors when compared to the industry median at 1.31.

You can read more about Heritage Insurance Holdings Inc’s key financial metrics like shareholder yield, price-to-free-cash-flow and EV/EBITDA ratio, or learn more about its Momentum and Growth Grades, by subscribing to A+ Investor.

ICC Holdings Inc’s Value Grade

Value Grade:

ICC Holdings, Inc. is a specialty insurance carrier primarily underwriting commercial multi-peril, liquor liability, workers? compensation, and umbrella liability coverage for the food and beverage industry through its subsidiary insurance company, Illinois Casualty Company (ICC). ICC specializes in the food and beverage industry. Its product language is based on Insurance Services Offices (ISO) forms, which is an industry standard. ICC also writes workers? compensation and commercial umbrella policies, which are written as complementary lines to the business owners policy (BOP) and liquor liability and are not offered on a stand-alone basis. ICC writes business in Arizona, Colorado, Illinois, Indiana, Iowa, Kansas, Michigan, Minnesota, Missouri, Ohio, Pennsylvania, Utah, and Wisconsin and markets through independent agents. It primarily markets its products through a network of approximately 191 independent agents in the states that it writes in.

Stocks with a Value Score from 81 to 100 are considered deep value, those with a score between 61 and 80 are value and so on.

ICC Holdings Inc has a Value Score of 92, which is considered to be undervalued.

ICC Holdings Inc’s price-earnings ratio is 10.5 compared to the industry median at 14.2. This means that it has a lower price relative to its earnings compared to its peers. This makes ICC Holdings Inc more attractive for value investors.

ICC Holdings Inc’s price-to-book ratio is higher than its peers. This could make ICC Holdings Inc less attractive for value investors when compared to the industry median at 1.31.

You can read more about ICC Holdings Inc’s key financial metrics like shareholder yield, price-to-free-cash-flow and EV/EBITDA ratio, or learn more about its Momentum and Growth Grades, by subscribing to A+ Investor.

Radian Group Inc’s Value Grade

Value Grade:

Radian Group Inc. is a diversified mortgage and real estate services company. The Company provides mortgage insurance and other products and services to the real estate and mortgage finance industries. The Company operates through its two business segments: Mortgage and homegenius. The Company’s Mortgage segment aggregates, manages and distributes United States mortgage credit risk on behalf of mortgage lending institutions and mortgage credit investors, principally through private mortgage insurance on residential first-lien mortgage loans, and also provides other credit risk management, contract underwriting and fulfillment solutions. The Company's homegenius segment offers an array of title, real estate and technology products and services to consumers, mortgage lenders, mortgage and real estate investors, Government-sponsored enterprises (GSE) and real estate brokers and agents, and corporations for their employees.

Stocks with a Value Score from 81 to 100 are considered deep value, those with a score between 61 and 80 are value and so on.

Radian Group Inc has a Value Score of 71, which is considered to be undervalued.

Radian Group Inc’s price-earnings ratio is 8.9 compared to the industry median at 14.2. This means that it has a lower price relative to its earnings compared to its peers. This makes Radian Group Inc more attractive for value investors.

Radian Group Inc’s price-to-book ratio is higher than its peers. This could make Radian Group Inc less attractive for value investors when compared to the industry median at 1.31.

You can read more about Radian Group Inc’s key financial metrics like shareholder yield, price-to-free-cash-flow and EV/EBITDA ratio, or learn more about its Momentum and Growth Grades, by subscribing to A+ Investor.

White Mountains Insurance Group Ltd’s Value Grade

Value Grade:

White Mountains Insurance Group, Ltd. is a financial service holding company. The Company is engaged in the acquisition of businesses and assets in the insurance, financial services, and related sectors, operating these businesses and assets through its subsidiaries and disposing of these businesses and assets. The Company’s segments include HG Global/BAM, Ark/WM Outrigger and Kudu. The Company conducts its business primarily in four areas: municipal bond insurance, property and casualty insurance and reinsurance, capital solutions for asset and wealth management firms and other operations. Its municipal bond insurance business is conducted through its subsidiary HG Global Ltd. Its property and casualty insurance and reinsurance business are conducted through its subsidiary Ark Insurance Holdings Limited and its subsidiaries. The Company, through its subsidiary, Kudu Investment Management, LLC, and its subsidiaries, provides capital solutions for asset and wealth management firms.

Stocks with a Value Score from 81 to 100 are considered deep value, those with a score between 61 and 80 are value and so on.

White Mountains Insurance Group Ltd has a Value Score of 78, which is considered to be undervalued.

White Mountains Insurance Group Ltd’s price-earnings ratio is 9.0 compared to the industry median at 14.2. This means that it has a lower price relative to its earnings compared to its peers. This makes White Mountains Insurance Group Ltd more attractive for value investors.

White Mountains Insurance Group Ltd’s price-to-book ratio is higher than its peers. This could make White Mountains Insurance Group Ltd less attractive for value investors when compared to the industry median at 1.31.

You can read more about White Mountains Insurance Group Ltd’s key financial metrics like shareholder yield, price-to-free-cash-flow and EV/EBITDA ratio, or learn more about its Momentum and Growth Grades, by subscribing to A+ Investor.

Other Insurance - Property & Casualty Stock Grades

Value is just one of the five Stock Grades included in our A+ Investor service. AAII members can see the top-graded stocks—those with grades of A or B for value, growth, momentum, earnings estimate revisions and quality—on the A+ Stock Grades Screener.

Also, if you want full access to all of AAII’s premium services, you can subscribe to one convenient bundled plan called AAII Platinum where you can try out A+ Investor, AAII Dividend Investing, the Stock Superstars Report, Growth Investing and VMQ Stocks. With the other premium services, you can dive deep into additional metrics, portfolios, commentary and information about Insurance - Property & Casualty stocks as well as other industrys.

Choosing Which of the 5 Best Insurance - Property & Casualty Stocks Is Right for You

Choosing which value stocks to invest in will ultimately depend on your individual goals and allocation; however, comparing similar value stocks in the same industry can help you analyze which might be better investments for you in the long run. So, let’s take a look at the Value Grade for all of our stocks.

• Essent Group Ltd stock has a Value Grade of B.
• Heritage Insurance Holdings Inc stock has a Value Grade of A.
• ICC Holdings Inc stock has a Value Grade of A.
• Radian Group Inc stock has a Value Grade of B.
• White Mountains Insurance Group Ltd stock has a Value Grade of B.

Now that you have a bit more background about each of the 5 undervalued stocks in the Insurance - Property & Casualty industry as well as their overall grades, it’s time for you to conduct additional research to see if these could fit your portfolio needs based on your goals and risk tolerance. AAII can help you figure out both and identify which investments align with what works best for you.

We do so through a program of education that teaches you to invest for yourself and become an effective manager of your own wealth—no more relying on others for your financial independence. You can rely on AAII for timeless articles on financial planning and stock-picking, unbiased research and actionable analysis that makes you a better investor.

A+ Investor adds to that qualitative teaching by giving you a powerful data suite that helps you whittle down investment decisions to find stocks, exchange-traded funds (ETFs) or mutual funds that meet your needs.

Additional Resources About Insurance - Property & Casualty Stocks

Want to learn more about Insurance - Property & Casualty stocks to see if they could be the right investment for you? Check out some additional resources and articles to help you on your financial journey.

• 5 Undervalued Insurance - Property & Casualty Stocks for Monday, April 01
• 4 Undervalued Insurance - Property & Casualty Stocks for Friday, March 29
• 5 Undervalued Insurance - Property & Casualty Stocks for Thursday, March 28
• 4 Undervalued Insurance - Property & Casualty Stocks for Wednesday, March 27

AAII Disclaimer

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