VCTR vs. CG: Which Stock Is the Better Value Option?

Investors interested in Financial - Investment Management stocks are likely familiar with Victory Capital Holdings (VCTR) and Carlyle Group (CG). 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 puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.

Currently, Victory Capital Holdings has a Zacks Rank of #2 (Buy), while Carlyle Group has a Zacks Rank of #3 (Hold). The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that VCTR has an improving earnings outlook. However, value investors will care about much more than just this.

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.

VCTR currently has a forward P/E ratio of 10.60, while CG has a forward P/E of 13.58. We also note that VCTR has a PEG ratio of 0.65. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. CG currently has a PEG ratio of 1.17.

Another notable valuation metric for VCTR is its P/B ratio of 1.79. 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 3.02.

These metrics, and several others, help VCTR earn a Value grade of B, while CG has been given a Value grade of D.

VCTR has seen stronger estimate revision activity and sports more attractive valuation metrics than CG, so it seems like value investors will conclude that VCTR is the superior option right now.

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This article originally published on Zacks Investment Research (zacks.com).

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