Investors interested in Financial - Investment Bank stocks are likely familiar with Nomura Holdings (NMR) and Robinhood Markets, Inc. (HOOD). But which of these two stocks offers value investors a better bang for their buck right now? We'll need to 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 Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
Right now, both Nomura Holdings and Robinhood Markets, Inc. are sporting a Zacks Rank of #2 (Buy). Investors should feel comfortable knowing that both of these stocks have an improving earnings outlook since the Zacks Rank favors companies that have witnessed positive analyst estimate revisions. But this is just one piece of the puzzle for value investors.
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.
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.
NMR currently has a forward P/E ratio of 9.44, while HOOD has a forward P/E of 89.21. We also note that NMR has a PEG ratio of 3.52. 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. HOOD currently has a PEG ratio of 5.10.
Another notable valuation metric for NMR is its P/B ratio of 0.87. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. By comparison, HOOD has a P/B of 15.76.
These metrics, and several others, help NMR earn a Value grade of A, while HOOD has been given a Value grade of F.
Both NMR and HOOD are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that NMR is the superior value option right now.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Nomura Holdings Inc ADR (NMR): Free Stock Analysis Report Robinhood Markets, Inc. (HOOD): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
Zacks Investment Research
