Investors with an interest in Financial - Investment Bank stocks have likely encountered both 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.
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, BGC Group is sporting a Zacks Rank of #2 (Buy), while MarketAxess has a Zacks Rank of #3 (Hold). This means that BGC's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. However, value investors will care about much more than just this.
Value investors analyze a variety of traditional, tried-and-true metrics to help find companies 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.
BGC currently has a forward P/E ratio of 7.85, while MKTX has a forward P/E of 22.84. We also note that BGC has a PEG ratio of 0.37. 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 3.31.
Another notable valuation metric for BGC is its P/B ratio of 3.97. 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 4.62.
These are just a few of the metrics contributing to BGC's Value grade of A and MKTX's Value grade of D.
BGC has seen stronger estimate revision activity and sports more attractive valuation metrics than MKTX, so it seems like value investors will conclude that BGC is the superior 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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