Based on key financial metrics such as the price-to-sales ratio, shareholder yield and the price-earnings ratio, the following 3 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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3 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 3 undervalued stocks in the Insurance - Property & Casualty industry for Tuesday, June 11, 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.

Cna Financial Corp’s Value Grade

Value Grade:

CNA Financial Corporation is an insurance holding company. The Company’s segments include Specialty, Commercial and International, and Life & Group and Corporate & Other. The Specialty segment offers management and professional liability and other coverages through property and casualty products and services using a network of brokers, independent agencies and managing general underwriters. The Commercial segment works with a network of brokers and independent agents to market a range of property and casualty insurance products to all types of insureds targeting small business, construction, middle markets and other commercial customers. The International segment underwrites property and casualty coverages on a global basis through a branch operation in Canada, a European business consisting of insurance companies based in the United Kingdom and Luxembourg and Hardy, its Lloyd's syndicate. The Life & Group segment includes the results of its long-term care business that is in run-off.

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.

Cna Financial Corp has a Value Score of 90, which is considered to be undervalued.

When you look at Cna Financial Corp’s price-to-sales ratio at 0.89 compared to the industry median at 1.25, this company has a lower price relative to revenue compared to its peers. This could make Cna Financial Corp’s stock more attractive for value investors.

Cna Financial Corp’s price-earnings ratio is 9.71 compared to the industry median at 12.73. This means it has a lower share price relative to earnings compared to its peers. This could make Cna Financial Corp more attractive for value investors.

Now, let’s assess Cna Financial Corp’s EV/EBITDA ratio, also known as enterprise multiple. At 4.4, when compared to the industry median of 7.1, the company may be considered undervalued 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. Cna Financial Corp’s shareholder yield is higher than its industry median ratio of 2.11%. 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. Cna Financial Corp’s price-to-book ratio is lower than its industry median ratio of 1.29. This could make Cna Financial Corp more attractive to investors looking for a new addition to their portfolio.

Lastly, let’s take a look at Cna Financial Corp’s price-to-free-cash-flow ratio (P/FCF), which can indicate a company’s market value relative to its operating cash flow. Cna Financial Corp’s price-to-free-cash-flow ratio is higher than its industry median ratio of 9.48. This could make Cna Financial Corp less attractive because the higher P/FCF ratio indicates that Cna Financial Corp 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.

Global Indemnity Group LLC’s Value Grade

Value Grade:

Global Indemnity Group, LLC provides both admitted and non-admitted specialty property and specialty casualty insurance coverages and individual policyholder coverages in the United States, and reinsurance worldwide. Its segments include Penn-America and Non-Core Operations. The Penn-America segment includes all core products which include Wholesale Commercial, Programs, Assumed Reinsurance, and the InsurTech products. The Penn-America segment distributes specialty property and casualty insurance products in the excess and surplus lines marketplace. InsurTech products are Collectibles, VacantExpress and smaller products which are distributed via the Internet. The Non-Core Operations segment represents lines of business that have been de-emphasized or are no longer being written. Non-Core Operations includes manufactured and dwelling home business, farm, ranch and equine business, specialty personal lines products, such as motorcycle, watercraft, and certain homeowners and others.

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.

Global Indemnity Group LLC has a Value Score of 94, which is considered to be undervalued.

Global Indemnity Group LLC’s price-earnings ratio is 12.6 compared to the industry median at 12.7. This means that it has a lower price relative to its earnings compared to its peers. This makes Global Indemnity Group LLC more attractive for value investors.

Global Indemnity Group LLC’s price-to-book ratio is higher than its peers. This could make Global Indemnity Group LLC less attractive for value investors when compared to the industry median at 1.29.

You can read more about Global Indemnity Group LLC’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.

NMI Holdings Inc’s Value Grade

Value Grade:

NMI Holdings, Inc. provides mortgage insurance (MI) through its wholly owned insurance subsidiaries, National Mortgage Insurance Corporation (NMIC) and National Mortgage Reinsurance Inc One (Re One). NMIC is its primary insurance subsidiary and is licensed to write MI coverage in all 50 states and District of Columbia (D.C.). Its subsidiary, NMI Services, Inc. (NMIS), provides outsourced loan review services to mortgage loan originators. It offers two principal types of MI coverage, primary and pool. Primary MI provides default protection on individual mortgage loans at specified coverage percentages. All its primary insurance is written on first-lien mortgage loans, with nearly all secured by owner-occupied single-family homes (defined as one-to-four family homes and condominiums). Pool insurance is generally used to provide additional credit enhancement for certain secondary market mortgage transactions. It offers outsourced loan review services to mortgage originators through NMIS.

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.

NMI Holdings Inc has a Value Score of 78, which is considered to be undervalued.

NMI Holdings Inc’s price-earnings ratio is 8.0 compared to the industry median at 12.7. This means that it has a lower price relative to its earnings compared to its peers. This makes NMI Holdings Inc more attractive for value investors.

NMI Holdings Inc’s price-to-book ratio is lower than its peers. This could make NMI Holdings Inc fairly attractive for value investors when compared to the industry median at 1.29.

You can read more about NMI 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.

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 3 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.

• Cna Financial Corp stock has a Value Grade of A.
• Global Indemnity Group LLC stock has a Value Grade of A.
• NMI Holdings Inc stock has a Value Grade of B.

Now that you have a bit more background about each of the 3 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.

• 3 Undervalued Insurance - Property & Casualty Stocks for Tuesday, June 11
• 4 Undervalued Insurance - Property & Casualty Stocks for Monday, June 10
• Why Bowhead Specialty Holdings Inc’s (BOW) Stock Is Up 4.18%
• 3 Undervalued Insurance - Property & Casualty Stocks for Friday, June 07

AAII Disclaimer

We make no representations or warranties that any investor will, or is likely to, achieve profits similar to those shown, because past, hypothetical or simulated performance is not necessarily indicative of future results. Before making an investment decision, you should consider your circumstances and whether the information on our content is applicable to your situation. This information was prepared in good faith and we accept no liability for any errors or omissions. The full disclaimer can be read here.