Investors looking for stocks in the Financial - Investment Management sector might want to consider either Affiliated Managers Group (AMG) or Carlyle Group (CG). But which of these two companies is the best option for those looking for undervalued stocks? 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 proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
Right now, Affiliated Managers Group is sporting a Zacks Rank of #1 (Strong Buy), while Carlyle Group has a Zacks Rank of #3 (Hold). Investors should feel comfortable knowing that AMG likely has seen a stronger improvement to its earnings outlook than CG has recently. But this is only part of the picture for value investors.
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.
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.
AMG currently has a forward P/E ratio of 9.87, while CG has a forward P/E of 15.50. We also note that AMG has a PEG ratio of 0.63. 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. CG currently has a PEG ratio of 1.16.
Another notable valuation metric for AMG is its P/B ratio of 1.63. 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, CG has a P/B of 3.42.
Based on these metrics and many more, AMG holds a Value grade of B, while CG has a Value grade of D.
AMG 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 AMG is likely the superior value option right now.
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Affiliated Managers Group, Inc. (AMG): Free Stock Analysis Report Carlyle Group Inc. (CG): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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