Are Investors Undervaluing CNA Financial (CNA) Right Now?

The proven Zacks Rank system focuses on earnings estimates and estimate revisions to find winning stocks. Nevertheless, we know that our readers all have their own perspectives, so we are always looking at the latest trends in value, growth, and momentum to find strong picks.

Looking at the history of these trends, perhaps none is more beloved than value investing. This strategy simply looks to identify companies that are being undervalued by the broader market. Value investors use fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.

Luckily, Zacks has developed its own Style Scores system in an effort to find stocks with specific traits. Value investors will be interested in the system's "Value" category. Stocks with both "A" grades in the Value category and high Zacks Ranks are among the strongest value stocks on the market right now.

One stock to keep an eye on is CNA Financial (CNA). CNA is currently sporting a Zacks Rank #2 (Buy), as well as a Value grade of A. The stock is trading with a P/E ratio of 9.7, which compares to its industry's average of 25.83. Over the last 12 months, CNA's Forward P/E has been as high as 11.18 and as low as 9.52, with a median of 10.26.

Investors will also notice that CNA has a PEG ratio of 3.90. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. CNA's PEG compares to its industry's average PEG of 4.40. Over the last 12 months, CNA's PEG has been as high as 9.20 and as low as 3.19, with a median of 5.60.

We should also highlight that CNA has a P/B ratio of 1.16. 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. This stock's P/B looks solid versus its industry's average P/B of 1.39. Over the past 12 months, CNA's P/B has been as high as 1.38 and as low as 1.10, with a median of 1.24.

Value investors also use the P/S ratio. The P/S ratio is calculated as price divided by sales. This is a preferred metric because revenue can't really be manipulated, so sales are often a truer performance indicator. CNA has a P/S ratio of 0.86. This compares to its industry's average P/S of 1.31.

If you're looking for another solid Insurance - Property and Casualty value stock, take a look at First American Financial (FAF). FAF is a Zacks Rank of #1 (Strong Buy) stock with a Value score of A.

First American Financial also has a P/B ratio of 1.31 compared to its industry's price-to-book ratio of 1.39. Over the past year, its P/B ratio has been as high as 1.43, as low as 1.08, with a median of 1.29.

These figures are just a handful of the metrics value investors tend to look at, but they help show that CNA Financial and First American Financial are likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, CNA and FAF 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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