Investors interested in Financial - Investment Management stocks are likely familiar with Janus Henderson Group plc (JHG) and KKR & Co. Inc. (KKR). But which of these two companies is the best option for those looking for undervalued stocks? 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.
Janus Henderson Group plc and KKR & Co. Inc. are sporting Zacks Ranks of #1 (Strong Buy) and #3 (Hold), respectively, right now. This means that JHG's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. But this is only part of the picture 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.
Our Value category highlights undervalued companies by looking at a variety of key metrics, including the popular P/E ratio, as well as the P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that have been used by value investors for years.
JHG currently has a forward P/E ratio of 12.18, while KKR has a forward P/E of 26.97. We also note that JHG has a PEG ratio of 1.06. 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. KKR currently has a PEG ratio of 1.35.
Another notable valuation metric for JHG is its P/B ratio of 1.4. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. For comparison, KKR has a P/B of 1.86.
Based on these metrics and many more, JHG holds a Value grade of B, while KKR has a Value grade of D.
JHG 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 JHG is likely the superior value option right now.
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Janus Henderson Group plc (JHG): Free Stock Analysis Report KKR & Co. Inc. (KKR): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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