Do Insurance Stocks Look Attractive at Current Levels?

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.

Do Insurance Stocks Look Attractive at Current Levels?

390 analysts cover the 21 insurance stocks within the Financial Select Sector SPDR ETF (XLF). Of these, there are 186 “buy” ratings assigned, 24 “sell” ratings, and 180 “hold” ratings. With nearly 50% buy ratings, analysts remain bullish on these stocks despite turbulent financial markets and a dim interest rate outlook.

Wall Street (SPY) analysts are most upbeat about Chubb (CB), as it has received 76% “buy” ratings and 24% “hold” ratings from the 26 analysts that are covering the stock.

In contrast, analysts are most bearish about the performance of Torchmark (TMK), as the stock has received just 7% buy ratings and 40% sell ratings. Out of the 15 analysts covering the stock, eight have given it a “sell” rating, six have rated it a “hold,” and one has given it a “buy.”

Analyst estimates

Analysts’ estimates indicate an upside of 7.7% for Chubb from its closing price of $120.85 on April 1 for the next-12-month period. Meanwhile, Torchmark is trading 0.3% below analyst estimates of $54.75.

Valuations

Insurance companies within the XLF ETF are trading at an average price-to-book multiple of 1.5x. Genworth Financial (GNW) is the cheapest stock with a price-to-book multiple of 0.11x while Marsh and McLennan (MMC) with a price-to-book of 4.9x is currently expensive on a price-to-book basis.

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