Investors looking for stocks in the Financial - Miscellaneous Services sector might want to consider either XP Inc.A (XP) or Blackstone Inc. (BX). But which of these two stocks offers value investors a better bang for their buck right now? We'll need to 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 favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
XP Inc.A and Blackstone Inc. are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. Investors should feel comfortable knowing that XP likely has seen a stronger improvement to its earnings outlook than BX has recently. However, value investors will care about much more than just this.
Value investors also try to analyze a wide range of traditional figures and metrics to help determine whether a company is undervalued at its current share price levels.
The Style Score Value grade factors in a variety of key fundamental metrics, including the popular P/E ratio, P/S ratio, earnings yield, cash flow per share, and a number of other key stats that are commonly used by value investors.
XP currently has a forward P/E ratio of 1.41, while BX has a forward P/E of 21.31. We also note that XP has a PEG ratio of 0.09. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. BX currently has a PEG ratio of 1.42.
Another notable valuation metric for XP is its P/B ratio of 1.95. 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, BX has a P/B of 4.51.
Based on these metrics and many more, XP holds a Value grade of A, while BX has a Value grade of C.
XP sticks out from BX in both our Zacks Rank and Style Scores models, so value investors will likely feel that XP is the better option right now.
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This article originally published on Zacks Investment Research (zacks.com).