BGC vs. EVR: Which Stock Is the Better Value Option?

Investors interested in Financial - Investment Bank stocks are likely familiar with BGC Group (BGC) and Evercore (EVR). But which of these two companies is the best option for those looking for undervalued stocks? 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 Zacks Rank is a proven strategy that targets companies with positive earnings estimate revision trends, while our Style Scores work to grade companies based on specific traits.

Currently, both BGC Group and Evercore are holding a Zacks Rank of #2 (Buy). This means that both companies have witnessed positive earnings estimate revisions, so investors should feel comfortable knowing that both of these stocks have an improving earnings 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.

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.

BGC currently has a forward P/E ratio of 6.80, while EVR has a forward P/E of 17.28. We also note that BGC has a PEG ratio of 0.34. 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. EVR currently has a PEG ratio of 0.51.

Another notable valuation metric for BGC is its P/B ratio of 3.91. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. By comparison, EVR has a P/B of 5.93.

These metrics, and several others, help BGC earn a Value grade of A, while EVR has been given a Value grade of C.

Both BGC and EVR are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that BGC is the superior value option right now.

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

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