Investors interested in Financial - Investment Management stocks are likely familiar with Invesco (IVZ) and Franklin Resources (BEN). But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.
Everyone has their own methods for finding great value opportunities, but our model includes pairing an impressive grade in the Value category of our Style Scores system with a strong Zacks Rank. The proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
Invesco has a Zacks Rank of #2 (Buy), while Franklin Resources has a Zacks Rank of #3 (Hold) right now. Investors should feel comfortable knowing that IVZ likely has seen a stronger improvement to its earnings outlook than BEN has recently. But this is just one piece of the puzzle for value investors.
Value investors also try to analyze a wide range of traditional figures and metrics to help determine whether a company is undervalued at its current share price levels.
The Value category of the Style Scores system identifies undervalued companies by looking at a number of key metrics. These include the long-favored P/E ratio, P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that help us determine a company's fair value.
IVZ currently has a forward P/E ratio of 9.70, while BEN has a forward P/E of 12.07. We also note that IVZ has a PEG ratio of 1.55. 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. BEN currently has a PEG ratio of 1.98.
Another notable valuation metric for IVZ is its P/B ratio of 0.69. The P/B ratio is used to compare a stock's market value with its book value, which is defined as total assets minus total liabilities. For comparison, BEN has a P/B of 0.99.
These are just a few of the metrics contributing to IVZ's Value grade of B and BEN's Value grade of C.
IVZ 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 IVZ is likely the superior value option right now.
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Invesco Ltd. (IVZ): Free Stock Analysis Report Franklin Resources, Inc. (BEN): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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