Investors looking for stocks in the Financial - Investment Management sector might want to consider either Invesco (IVZ) or Carlyle Group (CG). 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.
Invesco and Carlyle Group are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. This means that IVZ's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. But this is just one piece of the puzzle for value investors.
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.
IVZ currently has a forward P/E ratio of 10.50, while CG has a forward P/E of 11.68. We also note that IVZ has a PEG ratio of 0.48. 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 1.52.
Another notable valuation metric for IVZ is its P/B ratio of 1.22. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. By comparison, CG has a P/B of 2.23.
These are just a few of the metrics contributing to IVZ's Value grade of A and CG's Value grade of D.
IVZ sticks out from CG in both our Zacks Rank and Style Scores models, so value investors will likely feel that IVZ is the better option right now.
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Invesco Ltd. (IVZ): Free Stock Analysis Report
Carlyle Group Inc. (CG): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).