Investors interested in Financial - Investment Management stocks are likely familiar with Ameriprise Financial Services (AMP) and Ares Management (ARES). But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.
We have found that the best way to discover great value opportunities is to pair a strong Zacks Rank with a great 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, Ameriprise Financial Services is sporting a Zacks Rank of #2 (Buy), while Ares Management has a Zacks Rank of #3 (Hold). Investors should feel comfortable knowing that AMP likely has seen a stronger improvement to its earnings outlook than ARES has recently. 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.
The Style Score Value grade factors in a variety of key fundamental metrics, including the popular P/E ratio, P/S ratio, earnings yield, cash flow per share, and a number of other key stats that are commonly used by value investors.
AMP currently has a forward P/E ratio of 13.23, while ARES has a forward P/E of 32.09. We also note that AMP has a PEG ratio of 1.06. 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. ARES currently has a PEG ratio of 1.28.
Another notable valuation metric for AMP is its P/B ratio of 7.74. 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, ARES has a P/B of 7.84.
These metrics, and several others, help AMP earn a Value grade of B, while ARES has been given a Value grade of D.
AMP stands above ARES thanks to its solid earnings outlook, and based on these valuation figures, we also feel that AMP is the superior value option right now.
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Ameriprise Financial, Inc. (AMP): Free Stock Analysis Report Ares Management Corporation (ARES): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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