Investors interested in Financial - Miscellaneous Services stocks are likely familiar with Virtu Financial (VIRT) and Brookfield Asset Management (BAM). But which of these two companies is the best option for those looking for undervalued stocks? Let's take a closer look.
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 puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Virtu Financial has a Zacks Rank of #1 (Strong Buy), while Brookfield Asset Management has a Zacks Rank of #4 (Sell) right now. The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that VIRT has an improving earnings outlook. But this is just one factor that value investors are interested in.
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.
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.
VIRT currently has a forward P/E ratio of 8.82, while BAM has a forward P/E of 37.33. We also note that VIRT has a PEG ratio of 0.51. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. BAM currently has a PEG ratio of 2.14.
Another notable valuation metric for VIRT is its P/B ratio of 3.92. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. By comparison, BAM has a P/B of 10.74.
These metrics, and several others, help VIRT earn a Value grade of A, while BAM has been given a Value grade of F.
VIRT sticks out from BAM in both our Zacks Rank and Style Scores models, so value investors will likely feel that VIRT is the better option right now.
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Virtu Financial, Inc. (VIRT): Free Stock Analysis Report Brookfield Asset Management Ltd. (BAM): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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