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 - Life & Health 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 - Life & Health 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 - Life & Health 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 - Life & Health industry for Wednesday, June 12, 2024. Let’s take a closer look at their individual scores to see how they measure up against each other and the Insurance - Life & Health 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.

Kansas City Life Insurance Co’s Value Grade

Value Grade:

Kansas City Life Insurance Company is a stock life insurance company that with its subsidiaries, is licensed to sell insurance products in about 49 states and the District of Columbia. The Company offers a diversified portfolio of individual insurance, annuity, and group life and health products through its life insurance companies. The Company’s segments include Individual Insurance, Group Insurance, and Old American. The Individual Insurance segment consists of individual insurance products for Kansas City Life Insurance Company (Kansas City Life), Grange Life Insurance Company (Grange Life), and the assumed reinsurance transactions. The Group Insurance segment consists of sales of group life, dental, vision, disability, accident, and critical illness products. The Old American segment consists of individual insurance products designed largely as final expense products. Its wholly owned subsidiaries include Old American Insurance Company (Old American) and Grange Life.

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.

Kansas City Life Insurance Co has a Value Score of 97, which is considered to be undervalued.

When you look at Kansas City Life Insurance Co’s price-to-sales ratio at 0.61 compared to the industry median at 0.92, this company has a lower price relative to revenue compared to its peers. This could make Kansas City Life Insurance Co’s stock more attractive for value investors.

Kansas City Life Insurance Co’s price-earnings ratio is 5.76 compared to the industry median at 9.90. This means it has a lower share price relative to earnings compared to its peers. This could make Kansas City Life Insurance Co more attractive for value investors.

Now, let’s assess Kansas City Life Insurance Co’s EV/EBITDA ratio, also known as enterprise multiple. At 3.1, when compared to the industry median of 7.6, 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. Kansas City Life Insurance Co’s shareholder yield is lower than its industry median ratio of 3.39%. 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. Kansas City Life Insurance Co’s price-to-book ratio is lower than its industry median ratio of 1.41. This could make Kansas City Life Insurance Co more attractive to investors looking for a new addition to their portfolio.

Metlife Inc’s Value Grade

Value Grade:

MetLife, Inc. is a financial services company. The Company is engaged in providing insurance, annuities, employee benefits and asset management for individual and institutional customers. The Company operates through six segments: Group Benefits; Retirement and Income Solutions (RIS); Asia; Latin America; Europe, the Middle East and Africa (EMEA), and MetLife Holdings. Its Group Benefits segment offers life insurance, dental, group short- and long-term disability, individual disability, accidental death and dismemberment (AD&D;) insurance, vision, and accident and health insurance, as well as prepaid legal plans and pet insurance. It also sells administrative services-only (ASO) arrangements to some employers. Its RIS segment provides funding and financing solutions that help institutional customers mitigate and manage liabilities primarily associated with their employee benefit programs using a spectrum of life and annuity-based insurance and investment products.

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.

Metlife Inc has a Value Score of 67, which is considered to be undervalued.

Metlife Inc’s price-earnings ratio is 23.7 compared to the industry median at 9.9. This means that it has a higher price relative to its earnings compared to its peers. This makes Metlife Inc less attractive for value investors.

Metlife Inc’s price-to-book ratio is lower than its peers. This could make Metlife Inc more attractive for value investors when compared to the industry median at 1.41.

You can read more about Metlife 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.

UTG Inc’s Value Grade

Value Grade:

UTG, Inc. is an insurance holding company. The Company is engaged in the business of individual life insurance, which includes the servicing of existing insurance business in-force, the acquisition of other companies in the insurance business, and the administration and processing of life insurance business for other entities. It operates through its subsidiary Universal Guaranty Life Insurance Company (UG). UG’s product portfolio consists of a limited number of life insurance product offerings. All the products are individual life insurance products, with design variations from each other to provide choices to the customer. Its Tradition policy is a fixed premium whole life insurance policy. Its annuity product is a five-year, single premium product. The Company’s investment real estate portfolio includes ownership in oil and gas royalties. Its investment portfolio consists of fixed maturities, equity securities, trading securities, mortgage loans, notes receivable and real estate.

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.

UTG Inc has a Value Score of 91, which is considered to be undervalued.

UTG Inc’s price-earnings ratio is 5.2 compared to the industry median at 9.9. This means that it has a lower price relative to its earnings compared to its peers. This makes UTG Inc more attractive for value investors.

UTG Inc’s price-to-book ratio is higher than its peers. This could make UTG Inc less attractive for value investors when compared to the industry median at 1.41.

You can read more about UTG 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 - Life & Health 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 - Life & Health stocks as well as other industrys.

Choosing Which of the 3 Best Insurance - Life & Health 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.

• Kansas City Life Insurance Co stock has a Value Grade of A.
• Metlife Inc stock has a Value Grade of B.
• UTG Inc stock has a Value Grade of A.

Now that you have a bit more background about each of the 3 undervalued stocks in the Insurance - Life & Health 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 - Life & Health Stocks

Want to learn more about Insurance - Life & Health 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 - Life & Health Stocks for Wednesday, June 12
• 3 Undervalued Insurance - Life & Health Stocks for Monday, June 10
• Why Oscar Health Inc’s (OSCR) Stock Is Up 6.16%
• Why Prudential PLC (ADR)’s (PUK) Stock Is Down 5.49%

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.