Investors interested in Financial - Miscellaneous Services stocks are likely familiar with XP Inc.A (XP) and Blackstone Inc. (BX). 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 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.
XP Inc.A has a Zacks Rank of #2 (Buy), while Blackstone Inc. has a Zacks Rank of #3 (Hold) right now. This means that XP's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. But this is just one factor that value investors are interested in.
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 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.
XP currently has a forward P/E ratio of 11.18, while BX has a forward P/E of 18.51. We also note that XP has a PEG ratio of 0.79. 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. BX currently has a PEG ratio of 1.01.
Another notable valuation metric for XP is its P/B ratio of 2.78. 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, BX has a P/B of 4.25.
These are just a few of the metrics contributing to XP's Value grade of A and BX's Value grade of D.
XP stands above BX thanks to its solid earnings outlook, and based on these valuation figures, we also feel that XP is the superior value option right now.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
XP Inc. (XP): Free Stock Analysis Report Blackstone Inc. (BX): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
Zacks Investment Research
