Investors looking for stocks in the Financial - Miscellaneous Services sector might want to consider either Bread Financial Holdings (BFH) or Brookfield Asset Management (BAM). But which of these two stocks presents investors with the better value opportunity right now? 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 proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
Right now, Bread Financial Holdings is sporting a Zacks Rank of #1 (Strong Buy), while Brookfield Asset Management has a Zacks Rank of #4 (Sell). The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that BFH has an improving earnings outlook. But this is just one piece of the puzzle for value investors.
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 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.
BFH currently has a forward P/E ratio of 8.19, while BAM has a forward P/E of 26.02. We also note that BFH has a PEG ratio of 0.82. 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. BAM currently has a PEG ratio of 1.84.
Another notable valuation metric for BFH is its P/B ratio of 1.05. The P/B ratio is used to compare a stock's market value with its book value, which is defined as total assets minus total liabilities. For comparison, BAM has a P/B of 9.14.
Based on these metrics and many more, BFH holds a Value grade of B, while BAM has a Value grade of F.
BFH is currently sporting an improving earnings outlook, which makes it stick out in our Zacks Rank model. And, based on the above valuation metrics, we feel that BFH is likely the superior value option right now.
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Bread Financial Holdings, Inc. (BFH): Free Stock Analysis Report
Brookfield Asset Management Ltd. (BAM): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).