Investors interested in stocks from the Financial - Investment Bank sector have probably already heard of BGC Group (BGC) and MarketAxess (MKTX). But which of these two stocks presents investors with the better value opportunity right now? 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 Zacks Rank is a proven strategy that targets companies with positive earnings estimate revision trends, while our Style Scores work to grade companies based on specific traits.
BGC Group and MarketAxess are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that BGC is likely seeing its earnings outlook improve to a greater extent. However, value investors will care about much more than just this.
Value investors are also interested in a number of tried-and-true valuation metrics that help show when a company is undervalued at its 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.
BGC currently has a forward P/E ratio of 8.50, while MKTX has a forward P/E of 24.68. We also note that BGC has a PEG ratio of 0.40. 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. MKTX currently has a PEG ratio of 3.58.
Another notable valuation metric for BGC is its P/B ratio of 4.3. 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, MKTX has a P/B of 4.99.
These are just a few of the metrics contributing to BGC's Value grade of B and MKTX's Value grade of D.
BGC 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 BGC is likely the superior value option right now.
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BGC Group, Inc. (BGC): Free Stock Analysis Report MarketAxess Holdings Inc. (MKTX): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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