Investors looking for stocks in the Financial - Investment Management sector might want to consider either Affiliated Managers Group (AMG) or Carlyle Group (CG). But which of these two companies is the best option for those looking for undervalued stocks? Let's 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 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.
Affiliated Managers Group and Carlyle Group are sporting Zacks Ranks of #1 (Strong Buy) and #3 (Hold), respectively, right now. This means that AMG's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. 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 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.
AMG currently has a forward P/E ratio of 7.95, while CG has a forward P/E of 11.48. We also note that AMG has a PEG ratio of 0.61. 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. CG currently has a PEG ratio of 1.
Another notable valuation metric for AMG is its P/B ratio of 1.28. 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, CG has a P/B of 2.63.
These metrics, and several others, help AMG earn a Value grade of A, while CG has been given a Value grade of C.
AMG stands above CG thanks to its solid earnings outlook, and based on these valuation figures, we also feel that AMG is the superior value option right now.
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Affiliated Managers Group, Inc. (AMG): Free Stock Analysis Report Carlyle Group Inc. (CG): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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