Investors with an interest in Financial - Miscellaneous Services stocks have likely encountered both Virtu Financial (VIRT) and Moody's (MCO). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.
We have found that the best way to discover great value opportunities is to pair a strong Zacks Rank with a great grade in the Value category of our Style Scores system. The Zacks Rank is a proven strategy that targets companies with positive earnings estimate revision trends, while our Style Scores work to grade companies based on specific traits.
Right now, Virtu Financial is sporting a Zacks Rank of #2 (Buy), while Moody's has a Zacks Rank of #3 (Hold). Investors should feel comfortable knowing that VIRT likely has seen a stronger improvement to its earnings outlook than MCO has recently. But this is just one piece of the puzzle for value investors.
Value investors analyze a variety of traditional, tried-and-true metrics to help find companies that they believe are undervalued at their current share price levels.
The Style Score Value grade factors in a variety of key fundamental metrics, including the popular P/E ratio, P/S ratio, earnings yield, cash flow per share, and a number of other key stats that are commonly used by value investors.
VIRT currently has a forward P/E ratio of 10.67, while MCO has a forward P/E of 36.41. We also note that VIRT has a PEG ratio of 0.63. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. MCO currently has a PEG ratio of 2.84.
Another notable valuation metric for VIRT is its P/B ratio of 4.34. 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. By comparison, MCO has a P/B of 23.29.
These are just a few of the metrics contributing to VIRT's Value grade of B and MCO's Value grade of F.
VIRT is currently sporting an improving earnings outlook, which makes it stick out in our Zacks Rank model. And, based on the above valuation metrics, we feel that VIRT is likely the superior value option right now.
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Virtu Financial, Inc. (VIRT): Free Stock Analysis Report Moody's Corporation (MCO): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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