American National Insurance Co. (ANAT) operates primarily in the insurance industry. The industry sub-segment is the life insurance, annuities, and property & casualty. ANAT competes with companies such as Prudential (PRU) & American Financial Group Inc. (AFG).
The valuation between these companies can be compared to get a better sense of where they stand in pricing. While AFG is currently trading (as of 4/4/08) at book value of $26 and PRU trading 1.5x book value, ANAT is trading at $105 which is well below book value of $140 this leads me to believe there is an upside of at least 26%.
The price to earning ratio for ANAT is 10 while PRU & AFG are 10.77 & 8.55 respectively.
With such small differences in the P/E ratio, I consider the book value the most significant factor as a reason I'd say ANAT is rather “cheaper” than the rest. One thing to consider is whether that book value is valid or not as we have seen in the recent weeks that book value as it relates to financial sector stockscan’t be regarded as absolute.
Here are additional highlights of the company:
* Profit margin 9%
* Operating margin 13.7%
* Debt / Equity ratio of 3.5%
* ROE of 8.25% (This figure to me is more important than ROA as insurance industry is not capital intensive)