Investors looking for stocks in the Financial - Investment Bank sector might want to consider either Nomura Holdings (NMR) or MarketAxess (MKTX). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.
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 Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
Nomura Holdings has a Zacks Rank of #2 (Buy), while MarketAxess has a Zacks Rank of #5 (Strong Sell) right now. This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that NMR is likely seeing its earnings outlook improve to a greater extent. However, value investors will care about much more than just this.
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.
Our Value category grades stocks based on a number of key metrics, including the tried-and-true P/E ratio, the P/S ratio, earnings yield, and cash flow per share, as well as a variety of other fundamentals that value investors frequently use.
NMR currently has a forward P/E ratio of 9.01, while MKTX has a forward P/E of 22.11. We also note that NMR has a PEG ratio of 3.87. 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. MKTX currently has a PEG ratio of 6.49.
Another notable valuation metric for NMR is its P/B ratio of 0.86. 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, MKTX has a P/B of 4.33.
These metrics, and several others, help NMR earn a Value grade of A, while MKTX has been given a Value grade of F.
NMR has seen stronger estimate revision activity and sports more attractive valuation metrics than MKTX, so it seems like value investors will conclude that NMR is the superior option right now.
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Nomura Holdings Inc ADR (NMR): 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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