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 Thursday, September 19, 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.

Axa SA (ADR)’s Value Grade

Value Grade:

AXA SA (AXA) is a France-based holding company engaged in the business of financial protection. AXA offers a broad range of products through business segments: Life & Savings, Property & Casualty, Health, Asset Management, and Banking. Its offering covers motor, household, property and general liability insurance, banking, savings vehicles, and other investment-based products for both Personal/Individual and Commercial/Group customers, as well as health, protection, and retirement products for individual or professional customers. AXA operates in seven geographical segments: France, Europe, Asia, AXA XL, the United States, International and Transversal & Central Holdings. AXA SA is the holding company of AXA Group.

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.

Axa SA (ADR) has a Value Score of 73, which is considered to be undervalued.

When you look at Axa SA (ADR)’s price-to-sales ratio at 0.91 compared to the industry median at 0.88, this company has a higher price relative to revenue compared to its peers. This could make Axa SA (ADR)’s stock less attractive for value investors.

Axa SA (ADR)’s price-earnings ratio is 11.12 compared to the industry median at 11.12. This means it has a similar share price relative to earnings compared to its peers. This could make Axa SA (ADR) less attractive for value investors.

Now, let’s assess Axa SA (ADR)’s EV/EBITDA ratio, also known as enterprise multiple. At 7.1, when compared to the industry median of 7.1, 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. Axa SA (ADR)’s shareholder yield is higher than its industry median ratio of 5.28%. 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. Axa SA (ADR)’s price-to-book ratio is higher than its industry median ratio of 1.52. This could make Axa SA (ADR) less attractive to investors looking for a new addition to their portfolio.

Lastly, let’s take a look at Axa SA (ADR)’s price-to-free-cash-flow ratio (P/FCF), which can indicate a company’s market value relative to its operating cash flow. Axa SA (ADR)’s price-to-free-cash-flow ratio is higher than its industry median ratio of 14.18. This could make Axa SA (ADR) less attractive because the higher P/FCF ratio indicates that Axa SA (ADR) 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.

Lincoln National Corp’s Value Grade

Value Grade:

Lincoln National Corporation is a holding company, which operates multiple insurance and retirement businesses through subsidiary companies. Its segments include Annuities, Life Insurance, Group Protection and Retirement Plan Services. The Annuities segment provides tax-deferred investment growth and lifetime income opportunities for its clients by offering variable annuities, fixed annuities and indexed variable annuities. The Life Insurance segment provides life insurance products, including term insurance, indexed universal life insurance (IUL) and variable universal life insurance (VUL) products, linked-benefit products, and critical illness and long-term care riders. The Group Protection segment offers group non-medical insurance products and services, including short- and long-term disability, statutory disability and paid family medical leave administration. The Retirement Plan Services segment provides employers with retirement plan products and services.

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.

Lincoln National Corp has a Value Score of 99, which is considered to be undervalued.

Lincoln National Corp’s price-earnings ratio is 3.2 compared to the industry median at 11.1. This means that it has a lower price relative to its earnings compared to its peers. This makes Lincoln National Corp more attractive for value investors.

Lincoln National Corp’s price-to-book ratio is higher than its peers. This could make Lincoln National Corp less attractive for value investors when compared to the industry median at 1.52.

You can read more about Lincoln National Corp’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.

Prudential Financial Inc’s Value Grade

Value Grade:

Prudential Financial, Inc. is a financial services provider and global investment manager. The Company offers a range of financial products and services, including life insurance, annuities, retirement-related products and services, mutual funds, and investment management. It offers these products and services to individual and institutional customers through its own and third-party distribution networks. It operates in the United States, Asia, Europe and Latin America. Its segment includes PGIM, U.S. Businesses, International Businesses, Closed Block division, and Corporate and Other operations. PGIM segment provides investment management services and solutions related to public fixed income, public equity, real estate debt and equity, private credit and other alternatives, and multi-asset class strategies, to institutional and retail clients and its general account. U.S. Businesses segment consists of the retirement strategies, group insurance and individual life 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.

Prudential Financial Inc has a Value Score of 83, which is considered to be undervalued.

Prudential Financial Inc’s price-earnings ratio is 15.3 compared to the industry median at 11.1. This means that it has a higher price relative to its earnings compared to its peers. This makes Prudential Financial Inc less attractive for value investors.

Prudential Financial Inc’s price-to-book ratio is lower than its peers. This could make Prudential Financial Inc fairly attractive for value investors when compared to the industry median at 1.52.

You can read more about Prudential Financial 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.

• Axa SA (ADR) stock has a Value Grade of B.
• Lincoln National Corp stock has a Value Grade of A.
• Prudential Financial 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 Thursday, September 19
• 3 Undervalued Insurance - Life & Health Stocks for Wednesday, September 18
• 3 Undervalued Insurance - Life & Health Stocks for Tuesday, September 17
• 3 Undervalued Insurance - Life & Health Stocks for Monday, September 16

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.