Investors interested in Financial - Investment Bank stocks are likely familiar with BGC Group (BGC) and MarketAxess (MKTX). 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 proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
BGC Group has a Zacks Rank of #2 (Buy), while MarketAxess has a Zacks Rank of #3 (Hold) right now. This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that BGC is likely seeing its earnings outlook improve to a greater extent. But this is just one piece of the puzzle for value investors.
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 Value category of the Style Scores system identifies undervalued companies by looking at a number of key metrics. These include the long-favored P/E ratio, P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that help us determine a company's fair value.
BGC currently has a forward P/E ratio of 7.66, while MKTX has a forward P/E of 21.01. We also note that BGC has a PEG ratio of 0.37. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. MKTX currently has a PEG ratio of 2.35.
Another notable valuation metric for BGC is its P/B ratio of 4.51. 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, MKTX has a P/B of 5.58.
These metrics, and several others, help BGC earn a Value grade of A, while MKTX has been given a Value grade of D.
BGC has seen stronger estimate revision activity and sports more attractive valuation metrics than MKTX, so it seems like value investors will conclude that BGC is the superior option right now.
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BGC Group, Inc. (BGC): Free Stock Analysis Report
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This article originally published on Zacks Investment Research (zacks.com).