Investors interested in Financial - Investment Bank stocks are likely familiar with BGC Group (BGC) and Tradeweb Markets (TW). But which of these two companies is the best option for those looking for undervalued stocks? Let's take a closer look.
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 proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
Currently, BGC Group has a Zacks Rank of #1 (Strong Buy), while Tradeweb Markets 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 BGC has an improving earnings outlook. However, value investors will care about much more than just this.
Value investors are also interested in a number of tried-and-true valuation metrics that help show when a company is undervalued at its 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 7.81, while TW has a forward P/E of 42.23. We also note that BGC has a PEG ratio of 0.32. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. TW currently has a PEG ratio of 2.39.
Another notable valuation metric for BGC is its P/B ratio of 4.25. 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, TW has a P/B of 5.17.
These are just a few of the metrics contributing to BGC's Value grade of A and TW's Value grade of F.
BGC stands above TW thanks to its solid earnings outlook, and based on these valuation figures, we also feel that BGC is the superior value option right now.
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BGC Group, Inc. (BGC): Free Stock Analysis Report Tradeweb Markets Inc. (TW): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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