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What Do Analysts Recommend for XLF’s Insurance Stocks?

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Mar. 31 2016, Updated 6:07 p.m. ET

Analysts’ recommendations

In this part of the series, we’ll look at the most attractive insurance stocks within the Financial Select Sector SPDR ETF (XLF) with respect to analysts’ ratings and valuations.

393 analysts cover the 22 insurance stocks within XLF. Of these, there are 185 “buy” ratings assigned, 24 “sell” ratings, and 184 “hold” ratings. With nearly 50% “buy” ratings, analysts remain bullish on these stocks despite turbulent financial markets and a dim interest rate outlook.

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Wall Street (SPY) analysts are the most upbeat about Chubb (CB). It received “buy” ratings from 19 analysts among the 26 analysts that are covering the stock. While seven analysts think that investors should continue holding this stock, none of them think that the stock should be sold. In contrast, analysts are the most bearish about the performance of Torchmark. The stock only received seven “buy” ratings. Out of the 15 analysts covering the stock, eight think that the stock should be sold, six rated it a “hold,” and one analyst assigned a “buy” rating.

Analysts’ estimates

Analysts’ estimates indicate an upside of 7.9% for Chubb from its closing price of $119.61 on March 24 for the next 12-month period. Meanwhile, Torchmark is trading 13.2% below analysts’ estimate of $83.4 on March 24.

Valuations

Insurance companies within XLF are trading at an average price-to-book ratio of 1.5x. Genworth Financial (GNW) is the cheapest stock with a price-to-book ratio of 0.1x. Marsh & McLennan (MMC) has a price-to-book ratio of 4.8x. Currently, it’s expensive on a price-to-book basis.

Read on to find out what moving averages tell us about insurance stocks.

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