It hasn't been a great afternoon session for Reinsurance investors, who have watched their shares sink by -3.7% to a price of $141.06. Some of you might be wondering if it's time to buy the dip. If you are considering this, make sure to check the company's fundamentals first to determine if the shares are fairly valued at today's prices.
Reinsurance Group of America, Incorporated engages in reinsurance business. The company belongs to the Financial Services sector, which has an average price to earnings (P/E) ratio of 13.34 and an average price to book (P/B) ratio of 1.95. In contrast, Reinsurance has a trailing 12 month P/E ratio of 16.6 and a P/B ratio of 2.6.
When we divideReinsurance's P/E ratio by its expected five-year EPS growth rate, we obtain a PEG ratio of 0.06, which indicates that the market is undervaluing the company's projected growth (a PEG ratio of 1 indicates a fairly valued company). Your analysis of the stock shouldn't end here. Rather, a good PEG ratio should alert you that it may be worthwhile to take a closer look at the stock.