Investors interested in Financial - Mortgage & Related Services stocks are likely familiar with Federal Agricultural Mortgage (AGM) and Zillow Group (ZG). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.
The best way to find great value stocks is to pair a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system. The proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
Right now, Federal Agricultural Mortgage is sporting a Zacks Rank of #2 (Buy), while Zillow Group has a Zacks Rank of #4 (Sell). This means that AGM's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. But this is just one piece of the puzzle for value investors.
Value investors also tend to look at a number of traditional, tried-and-true figures to help them find stocks that they believe are undervalued at their 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.
AGM currently has a forward P/E ratio of 11.78, while ZG has a forward P/E of 47.12. We also note that AGM has a PEG ratio of 1.07. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. ZG currently has a PEG ratio of 1.53.
Another notable valuation metric for AGM is its P/B ratio of 2. 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, ZG has a P/B of 4.17.
Based on these metrics and many more, AGM holds a Value grade of B, while ZG has a Value grade of F.
AGM has seen stronger estimate revision activity and sports more attractive valuation metrics than ZG, so it seems like value investors will conclude that AGM is the superior option right now.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Federal Agricultural Mortgage Corporation (AGM): Free Stock Analysis Report Zillow Group, Inc. (ZG): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
Zacks Investment Research
