Investors with an interest in Financial - Miscellaneous Services stocks have likely encountered both Bread Financial Holdings (BFH) and Brookfield Asset Management (BAM). 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.
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 Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
Bread Financial Holdings and Brookfield Asset Management are sporting Zacks Ranks of #1 (Strong Buy) and #4 (Sell), respectively, right now. Investors should feel comfortable knowing that BFH likely has seen a stronger improvement to its earnings outlook than BAM has recently. But this is just one factor that value investors are interested in.
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 8.13, while BAM has a forward P/E of 26.05. We also note that BFH has a PEG ratio of 1.18. 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. BAM currently has a PEG ratio of 1.86.
Another notable valuation metric for BFH is its P/B ratio of 1.03. 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, BAM has a P/B of 8.82.
These metrics, and several others, help BFH earn a Value grade of B, while BAM has been given a Value grade of F.
BFH sticks out from BAM in both our Zacks Rank and Style Scores models, so value investors will likely feel that BFH is the better 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).