IVZ vs. TPG: Which Stock Is the Better Value Option?

Investors looking for stocks in the Financial - Investment Management sector might want to consider either Invesco (IVZ) or TPG Inc. (TPG). 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 favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.

Right now, Invesco is sporting a Zacks Rank of #2 (Buy), while TPG Inc. has a Zacks Rank of #3 (Hold). The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that IVZ has an improving earnings outlook. However, value investors will care about much more than just this.

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.

Our Value category grades stocks based on a number of key metrics, including the tried-and-true P/E ratio, the P/S ratio, earnings yield, and cash flow per share, as well as a variety of other fundamentals that value investors frequently use.

IVZ currently has a forward P/E ratio of 12.15, while TPG has a forward P/E of 28.82. We also note that IVZ has a PEG ratio of 1.18. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. TPG currently has a PEG ratio of 1.48.

Another notable valuation metric for IVZ is its P/B ratio of 0.65. 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, TPG has a P/B of 6.16.

Based on these metrics and many more, IVZ holds a Value grade of B, while TPG has a Value grade of D.

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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This article originally published on Zacks Investment Research (zacks.com).

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