Investors interested in Financial - Investment Management stocks are likely familiar with Federated Hermes (FHI) and BlackRock (BLK). 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.
The best way to find great value stocks is to pair a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system. The proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Federated Hermes and BlackRock are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. Investors should feel comfortable knowing that FHI likely has seen a stronger improvement to its earnings outlook than BLK has recently. But this is just one piece of the puzzle 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.
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.
FHI currently has a forward P/E ratio of 11.25, while BLK has a forward P/E of 24.34. We also note that FHI has a PEG ratio of 0.67. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. BLK currently has a PEG ratio of 2.22.
Another notable valuation metric for FHI is its P/B ratio of 3.58. 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, BLK has a P/B of 3.64.
Based on these metrics and many more, FHI holds a Value grade of B, while BLK has a Value grade of D.
FHI stands above BLK thanks to its solid earnings outlook, and based on these valuation figures, we also feel that FHI is the superior value option right now.
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Federated Hermes, Inc. (FHI): Free Stock Analysis Report BlackRock (BLK): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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