Should Value Investors Buy RenaissanceRe (RNR) Stock?

While the proven Zacks Rank places an emphasis on earnings estimates and estimate revisions to find strong stocks, we also know that investors tend to develop their own individual strategies. With this in mind, we are always looking at value, growth, and momentum trends to discover great companies.

Considering these trends, value investing is clearly one of the most preferred ways to find strong stocks in any type of market. Value investors use a variety of methods, including tried-and-true valuation metrics, to find these stocks.

On top of the Zacks Rank, investors can also look at our innovative Style Scores system to find stocks with specific traits. For example, value investors will want to focus on the "Value" category. Stocks with high Zacks Ranks and "A" grades for Value will be some of the highest-quality value stocks on the market today.

One company to watch right now is RenaissanceRe (RNR). RNR is currently holding a Zacks Rank #2 (Buy) and a Value grade of A.

RNR is also sporting a PEG ratio of 1.72. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. RNR's PEG compares to its industry's average PEG of 4.29. Over the last 12 months, RNR's PEG has been as high as 3.67 and as low as 1.39, with a median of 1.84.

Investors should also recognize that RNR has a P/B ratio of 1.14. 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. RNR's current P/B looks attractive when compared to its industry's average P/B of 1.40. Over the past 12 months, RNR's P/B has been as high as 1.49 and as low as 1.09, with a median of 1.24.

Value investors also love the P/S ratio, which is calculated by simply dividing a stock's price with the company's sales. Some people prefer this metric because sales are harder to manipulate on an income statement. This means it could be a truer performance indicator. RNR has a P/S ratio of 1.02. This compares to its industry's average P/S of 1.31.

Finally, investors will want to recognize that RNR has a P/CF ratio of 5.13. This metric takes into account a company's operating cash flow and can be used to find stocks that are undervalued based on their solid cash outlook. RNR's current P/CF looks attractive when compared to its industry's average P/CF of 11.52. Over the past year, RNR's P/CF has been as high as 6.44 and as low as 3.18, with a median of 5.26.

These figures are just a handful of the metrics value investors tend to look at, but they help show that RenaissanceRe is likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, RNR feels like a great value stock at the moment.

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This article originally published on Zacks Investment Research (zacks.com).

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