JHG vs. KKR: Which Stock Is the Better Value Option?

Investors looking for stocks in the Financial - Investment Management sector might want to consider either Janus Henderson Group plc (JHG) or KKR & Co. Inc. (KKR). 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 Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.

Right now, Janus Henderson Group plc is sporting a Zacks Rank of #1 (Strong Buy), while KKR & Co. Inc. has a Zacks Rank of #3 (Hold). Investors should feel comfortable knowing that JHG likely has seen a stronger improvement to its earnings outlook than KKR 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 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.

JHG currently has a forward P/E ratio of 11.82, while KKR has a forward P/E of 24.32. We also note that JHG has a PEG ratio of 0.96. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. KKR currently has a PEG ratio of 1.24.

Another notable valuation metric for JHG is its P/B ratio of 1.41. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. By comparison, KKR has a P/B of 1.67.

These are just a few of the metrics contributing to JHG's Value grade of B and KKR's Value grade of D.

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

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

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