Investors interested in stocks from the Financial - Miscellaneous Services sector have probably already heard of Virtu Financial (VIRT) and Moody's (MCO). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.
Everyone has their own methods for finding great value opportunities, but our model includes pairing an impressive grade in the Value category of our Style Scores system with a strong Zacks Rank. The proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
Virtu Financial has a Zacks Rank of #2 (Buy), while Moody's has a Zacks Rank of #3 (Hold) right now. The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that VIRT has an improving earnings 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.
VIRT currently has a forward P/E ratio of 10.05, while MCO has a forward P/E of 35.65. We also note that VIRT has a PEG ratio of 0.93. 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. MCO currently has a PEG ratio of 2.78.
Another notable valuation metric for VIRT is its P/B ratio of 3.94. 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, MCO has a P/B of 22.62.
These are just a few of the metrics contributing to VIRT's Value grade of B and MCO's Value grade of F.
VIRT stands above MCO thanks to its solid earnings outlook, and based on these valuation figures, we also feel that VIRT is the superior value option right now.
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Virtu Financial, Inc. (VIRT): Free Stock Analysis Report Moody's Corporation (MCO): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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