Investors interested in Financial - Miscellaneous Services stocks are likely familiar with Virtu Financial (VIRT) and Brookfield Asset Management (BAM). But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.
There are plenty of strategies for discovering value stocks, but we have found that pairing a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system produces the best returns. 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.
Virtu Financial has a Zacks Rank of #1 (Strong Buy), while Brookfield Asset Management has a Zacks Rank of #3 (Hold) 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 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.
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 7.17, while BAM has a forward P/E of 37.99. We also note that VIRT has a PEG ratio of 0.41. 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. BAM currently has a PEG ratio of 2.17.
Another notable valuation metric for VIRT is its P/B ratio of 3.28. 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, BAM has a P/B of 10.93.
These metrics, and several others, help VIRT earn a Value grade of A, while BAM has been given a Value grade of F.
VIRT has seen stronger estimate revision activity and sports more attractive valuation metrics than BAM, so it seems like value investors will conclude that VIRT is the superior 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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